The 12 Biggest Money Mistakes: Money Matters - Yahoo! Finance:
"11. Don't pass up a Roth IRA.
The Roth is an absolute slam dunk. Yes, it's true there is no initial tax break: You invest money that you've already paid tax on, unlike a 401(k) where you get an upfront tax break because your contribution is pre-tax.
But the Roth pays off later. Your money grows tax-deferred while it's invested, and when you withdraw the funds in retirement --assuming you're at least 59 � and have had the account at least five years -- you won't pay one penny in tax. Meanwhile, all your 401(k) or 403(b) withdrawals will be taxed at your ordinary income tax rate.
I also like the great flexibility you get with a Roth: The money you contribute can be withdrawn at any time, without having any tax or penalty to pay. It's only the earnings in your Roth that need to stay put until you're 59 � to avoid any tax or penalty. While you should avoid needlessly raiding your retirement account, easy access to your Roth contributions is a nice emergency safety cushion for you.
So if you're eligible for a Roth IRA, you're crazy to pass it up. If you're single and have modified adjusted gross income below $95,000, or are married and file a joint tax return with MAGI below $150,000 you're able to invest the full $4,000 annual limit in a Roth this year. If you happen to be at least 50-years old, your limit is $5,000. Invest $4,000 a year for the next 30 years, earn an average 8 percent annual return, and you'll have nearly $500,000."
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PeaMouthChub
