via Wall Street Journal
With some stock indexes well below their highs this year despite a recent rally, Roth individual retirement accounts are gaining appeal.
A down market presents tax-savings opportunities for both owners of Roth IRAs and savers who would like to be. That’s because the main drawback of a Roth IRA is often the big tax hit affluent savers take when they put money into one, so depressed asset values minimize this downside. And some Roth IRA owners who transferred assets into their accounts last year when values were higher still have a chance at a do-over. The deadline to undo such transfers made in 2014 is Oct. 15.
Roth IRAs are considered the gold standard of tax-sheltered retirement plans, with good reason: Both asset growth and withdrawals can be tax-free, and Roth owners don’t have to take required withdrawals during their lifetime. By contrast, owners of traditional IRAs must make withdrawals after age 70½ that deplete the account, and the payouts are taxable at ordinary income rates.