If you are young and if you think taxes are going to rise during your working life (and who doesn't?), then investing now in a Roth IRA is a major money move that will pay off big at retirement.
You can contribute any amount to a Roth IRA, up to $6,000 per year. For those aged 50 and over, it is $7,000.
These contributions must be made from earnings from employment. The money represents money you have already paid taxes on. So there is no tax deduction for contributions.
But the beauty is that earnings in your Roth grow tax-free and qualified distributions are also tax-free. In other words, you might be paying a lower tax today on your money than you would pay on the money 30 years from now.
An example from Kiplinger Personal Finance: A 25-year-old contributes $5,000 each year until retirement at age 67. Assuming the account earns 8 percent, the total available would be $1.6 million. All withdrawals would be totally tax-free.
