What is the downside of a Roth IRA?
A Roth IRA features strict income eligibility limits that restrict high-earning individuals from making direct annual contributions to the account. Contributions are made with funds that have already been subjected to income taxation, meaning investors forfeit immediate tax deductions that are otherwise available with traditional retirement accounts. Furthermore, withdrawing earnings before reaching retirement age can trigger heavy financial penalties and taxes, and complex federal rules govern contribution limits and minimum holding periods for tax-free distributions.
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