Stonegate Financial Group Shares Information About Why High-Income Individuals Should Consider Backdoor Roth Individual Retirement Arrangements

SCOTTSDALE, Ariz., July 10, 2014 /PRNewswire-iReach/ -- Individuals and couples who bring in high incomes are not allowed to take direct advantage of Roth IRAs, and that means that they are usually barred from the benefits that come with Roth IRAs. This includes the ability to collect tax-free interest on the account, the allowance of the money to be passed down after the death of the account owner, and the freedom from minimum distributions from the IRA during the life of the owner.

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However, Stonegate Financial Group is glad to share that law changes in 2010 have allowed those who earn higher incomes to use Roth IRAs after all. Individuals who earn $129,000 or more a year are still not allowed to directly pay into a Roth IRA. Instead, they must pay into a traditional IRA, which has far fewer advantages. However, because of the law changes, there is a method that allows payments into a traditional IRA to be converted into a Roth IRA and, if it is done right, it can aid the individual and should not cause any extra costs.

Stonegate Financial Group does remind individuals that Backdoor IRA's do not work for everyone because of several restrictions. If the individual already has a traditional IRA accumulating interest, and tries to convert it, they will have to pay taxes on the interest immediately. There are also rules on the Roth IRA that require the individual to either be over 59 ½ or have the account for at least five years before they may make withdrawals. Making early withdrawals will cost the individual a penalty of 10%. Additionally, if the individual expects to have their earnings change, and they may be able to pay directly into a Roth account in the future, this may not be their best option.

For individuals who are not limited by these restrictions, and are currently using a traditional IRA, a Backdoor Roth IRA can prove to be a great investment. If the individual has nothing already paid into a traditional IRA, they can simply pay into it and convert the funds to a Roth IRA in a few days with no additional tax, and if they can wait until they meet the age requirement for withdrawals, they will avoid that fee as well. Stonegate Financial Group encourages interested parties to contact a financial adviser today to see what their options are and to find out if they can participate in a Roth IRA. Visit http://www.stonegatefg.com for more information on financial advice and solutions.

Media Contact: Jameson Van Houten, Stonegate Financial Group, (602) 953-8451, [email protected]

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SOURCE Stonegate Financial Group