4. Opportunity to increase your wealth at older ages.
You don't have to make withdrawals from a Roth. Traditional IRAs force you to start withdrawals at 70-1/2. If you work past 70-1/2, you can continue contributing to a Roth but not to a traditional IRA.
5. Potential savings on future Social Security taxes and Medicare premiums.
You owe income taxes on part of your Social Security benefits if you're single with an adjusted income of at least $25,000, or married with $32,000. Your "income" includes withdrawals from a traditional IRA, which — at 70-1/2 — could be large. Money withdrawn from a Roth, however, is exempt from this calculation, which holds future taxes down. Roth withdrawals also are exempt from the calculation that charges wealthy people higher premiums for Medicare. In this context, "wealthy" means adjusted incomes over $85,000 for singles and over $170,000 for married couples.
6. Larger annual contributions.
If Roths are offered within a company 401(k) plan, you can contribute up to $17,500 this year and $23,000 at 50 and older.
7. An option to roll over any amount of money from a traditional IRA or 401(k) into a Roth.
You might not want to do this because you'll owe income taxes on the amount transferred. But James Lange of the Lange Financial Group says the switch makes sense if you think your tax rate will be about the same or higher when you retire and you can pay the tax with non-IRA funds. Paying with IRA funds would deplete your "tax-favored" savings. So you might consider rolling over a modest amount each year.
8. A great gift for kids.
If your children or grandchildren can't afford to contribute to a retirement plan, you can start a Roth for them.
Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW. She writes the Financially Speaking column for AARP.