NEW YORK, Jan. 3, 2018 /PRNewswire/ -- This January marks the 20th anniversary of the Roth IRA. First made available in January of 1998, Roth IRAs are individual retirement accounts that are funded with after-tax dollars. In the 20 years since their inception, the rules surrounding them have changed drastically, often leaving investors unsure of how to properly contribute to and take distributions from their accounts. Ed Slott, CPA, a nationally-recognized IRA expert, founder of Ed Slott and Company and creator of www.irahelp.com, is commemorating this milestone by reviewing the benefits of this retirement savings vehicle and emphasizing why working with a well-trained financial professional is critical for retirement success.
Unlike contributions to traditional IRAs, contributions to Roth IRAs are not tax-deductible, but qualified distributions can be taken tax-free, making the Roth IRA desirable due to its tax-free growth and income. The late Senator William Roth was the driving force behind the creation of the Roth IRA; he aimed to help solve America's retirement crisis by providing a more flexible version of the IRA.
Highlights of the Evolution of the Roth IRA
- The Roth IRA was created under the Taxpayer Relief Act of 1997, which was enacted on August 5, 1997. In 1998, Americans could begin making contributions to a Roth IRA.
- In 2010, Congress eliminated the $100,000 Roth conversion income limit, opening the floodgates for anyone with an eligible rollover distribution to convert to a Roth IRA. Roth IRAs grew in popularity after this major change.
- According to the Investment Company Institute, at year-end 2016, Americans held $7.9 trillion in IRAs, with Roth IRAs accounting for $660 billion of that total.
"I am a big proponent of Roth IRAs, as contributions today lead to tax-free money in retirement, when you need it most. Unfortunately, the rules surrounding these retirement accounts are as confusing as ever," said Slott. "I have dedicated my career to educating people about IRAs, and I know that advisors and consumers alike continue to ask the same questions about Roth IRAs that they did 20 years ago when they were first introduced."
Leading the Way Since the Beginning
Recognizing that Roth IRAs were the way of the future, in January of 1998, Slott released his premiere issue of Ed Slott's IRA Advisor, a monthly newsletter for financial professionals that delivers money-saving tax strategies and answers the most complex IRA-related questions. In his inaugural issue, Slott addressed many of the same questions that Americans are asking today, including: What's the difference between a traditional and Roth IRA? How do I convert my traditional IRA to a Roth? And what happens if I need to pull money out of Roth IRA before 59 ½?
"Over the past 20 years, I have come to realize that an overwhelming majority of financial advisors don't know how to effectively take their clients through retirement. While many advisors may be able to help their clients accumulate wealth, most of them lack the knowledge of what I call the 'second half' of the retirement game– the critical distribution phase," added Slott. "The best investment returns in the world mean nothing if you lose it all to taxes, penalties or fees in retirement due to poor planning or bad advice."
Specialized Training in IRAs is Essential
In 2005, Slott observed a gap in knowledge amongst financial professionals which prompted him to go a step further and create Ed Slott's Elite IRA Advisor Group℠, an exclusive organization of advisors dedicated to the mastery of advanced retirement account and tax planning laws and strategies. The group is now comprised of nearly 400 of the nation's top financial professionals. Members of Ed Slott's Elite IRA Advisor Group℠ are equipped with up-to-date training, tools and resources to assist them when planning with their clients.
"For an advisor to be an effective retirement planner, they need specialized training in the intricacies of retirement accounts and the tax laws that impact them. I take pride in knowing that our network of advisors, armed with education, can assist their clients with even the most advanced retirement planning decisions," said Slott. "Let the 20th anniversary serve as an opportunity for investors to explore the many benefits of Roth IRAs, as well as a reminder of the importance of working with a qualified financial professional who is well-versed in the complexities of retirement planning and can guide them successfully through retirement."
Find a member of Ed Slott's Elite IRA Advisor Group℠ in your area here: www.irahelp.com/find-an-advisor.
ABOUT ED SLOTT AND COMPANY, LLC: Ed Slott and Company, LLC is the nation's leading provider of technical IRA education for financial advisors, CPAs and attorneys. Ed Slott's Elite IRA Advisor GroupSM is comprised of nearly 400 of the nation's top financial professionals who are dedicated to the mastery of advanced retirement account and tax planning laws and strategies. Slott is a nationally-recognized IRA distribution expert, bestselling author and professional speaker. He has hosted several public television specials, including "Ed Slott's Retirement Road Map!" Visit www.irahelp.com for more information.
SOURCE Ed Slott and Company, LLC