Roth IRAs can be a powerful tool for your retirement savings.

They can also be quite complicated.

Specifically, when it comes to rules around when you can withdraw your Roth IRAs and have

those withdrawals be fully tax-free.

So in today's video, I'm going to walk you through some unknown benefits of Roth IRAs,

as well as mistakes you need to avoid to make sure they're maximizing the tax-free potential

of these accounts.

This is another episode of Ready for Retirement. I'm your host, James Cannell, and I'm here to

teach you how to get the most of the life with your money. And now, on to the episode.

With Roth IRAs, many people don't actually know there's something called a five-year rule.

And most people don't actually know there's two different versions of this five-year rule.

This five-year rule is critical because the whole goal of Roth IRAs is to create tax-free income.

But if you violate those rules in any ways, you may end up paying taxes and a potential penalty on your Roth distributions.

So the first thing that we need to understand,

in order to make sure that we're maximizing the effectiveness of Roth IRAs is to understand

that money in Roth IRAs can only come from one of three different sources. Number one, it can be

a contribution. Number two, it can be a conversion. And number three, it can be growth. Each of those is critical

to understand because the way in which you pulled those dollars out is different based upon

the source. So let's walk through these one by one. The first and the most simple is contributions.

Contributions that you make to your Roth IRA are completely free for distribution and withdrawal

at any time without

penalty and without taxes. Doesn't matter if you're older than 59 and a half, younger than

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