The sooner you start a Roth IRA, the better. There is no age limit for contributing funds, including buying physical Gold in an IRA such as 1 oz gold eagle coins. But there is an age limit for starting withdrawals. You must be 59 and a half years old to start withdrawing income from contributions, or you must pay taxes and fines. In addition, to avoid taxes, the funds must be in the account for five years. The RMD directive ensures that you pay taxes on your savings after enjoying years of tax-deferred growth.
As you might have guessed, Roth IRAs are the only accounts that don't require minimum distributions at any age. Since these accounts are funded with after-tax money, Uncle Sam won't benefit from your withdrawals. This, of course, assumes that you comply with the “qualified retirement rules” established by the IRS. You can open an IRA at any age, but you need to earn income to contribute to it.
A 16-year-old with a part-time job can open an IRA and start contributing, but a 20-year-old full-time student with no income cannot make any contribution to the IRA. Keep in mind that minors can only open custodial IRAs, so they'll need the help of an adult to use them until they reach the minimum legal age for investing (usually 18, but it depends on state law). If you don't plan to stop working by the time you reach retirement age, you may want to continue making IRA contributions. In addition, participating in a qualified retirement plan has no influence on your eligibility to make contributions to the Roth IRA.
There are also no minimum distributions (RMDs) required, so you can leave your Roth IRA to your heirs if you don't need the money. If you have a relatively modest income, that lower AGI can help you maximize the amount of the savers tax credit you receive, which is available to eligible taxpayers who contribute to an employer-sponsored retirement plan or to a traditional or Roth IRA. Contributions to Roth IRAs are not deductible during the year they are made; rather, they consist of after-tax money. When you transfer money from one IRA to another IRA, it's called an IRA transfer, and you can also do it at any age.
The incentive to contribute to a Roth IRA is to generate savings for the future and not get a current tax deduction. If your income is relatively low, a traditional IRA or 401 (k) may allow you to receive more contributions to the plan as a tax credit for savers than you would save with a Roth. If you don't name a beneficiary, your spouse (if he is your primary beneficiary) can choose to inherit your Roth IRA or transfer it to a Roth IRA in your name. A Roth IRA might be better than a traditional IRA for people who want to save on taxes in retirement when they expect to earn more later than they do now.
In the family of financial planning products, the Roth Individual Retirement Account (IRA) sometimes resembles the great younger sister of the traditional IRA. With a traditional IRA or 401 (k), on the other hand, the income required to contribute the same maximum amount to the account would be lower, since the account is based on pre-tax income. So, if you have the money and meet income limits, you can contribute to a 401 (k) plan at work and then contribute to your own Roth IRA.