It’s not a secret to the bigger pockets community that I’m a big fan of the Roth IRA, but I love its features so much that I’m doing writing about it again. If you haven’t already read my previous Roth IRA piece, it serves as a good primer. The information below, however, will illustrate some of the lesser-known perks of owning a Roth IRA. Many investors and financial professionals are familiar with the main benefit of a Roth IRA. In short, it’s the fact that after you pay taxes on the money going into the Roth IRA, the plan’s investments grow tax free. Even better, when the time comes to take your distributions, you won’t have to pay taxes on those either. That being said, there are so many more benefits to the Roth IRA that you should know about if you’re considering this retirement account option. Below, you’ll find the top three. Roth IRA Benefit #1: Exemption From Required Minimum Distributions First, Roth IRAs are not subject to Required Minimum Distributions (RMDs). Traditional retirement plan owners are subject to RMD rules which require the account owner to start taking distributions and paying tax on the distributions at a given age. For most plans, the RMD rules kick in when the account owner reaches the age of 70 ½. Why is this a benefit to you? To put it simply, dodging the RMD rules allows the Roth IRA to keep gathering and growing tax-free income. This tax-free benefit extends to capital gains or other taxes on the investment returns. This allows the account to continue to accumulate tax-free income during the account owner’s life time. And perhaps even beyond. Learn more about how your Roth IRA can outlive you and provide your loved ones with additional security below. Roth IRA Benefit #2: You Can Share the Love With Your Spouse Death is inevitable. But if you were a smart investor who got a Roth IRA, your surviving spouse can continue contributing to that Roth IRA, provided your significant other is a beneficiary of that account. He or she can combine your Roth IRA into his or her own Roth IRA. Allowing the spouse beneficiary to take over the account allows additional tax free growth on investments in the Roth IRA account. By contrast, a Traditional IRA cannot be merged into an IRA of the surviving spouse nor can the surviving beneficiary spouse make additional contributions to this account. Non-spouse beneficiaries, such as the children of a Roth IRA owner, cannot make additional contributions to the inherited Roth IRA and cannot combine it with their own Roth IRA account. Other beneficiaries are subject to required minimum distribution rules, but they can delay out required distributions up to 5 years from the year of the Roth IRA account owner’s death. Additionally, they are also able to continue to keep the tax-free return treatment of the retirement account for 5 years after the death of the owner. The second option for non-spouse beneficiaries is to take withdrawals of the account over the life expectancy of the beneficiary. So, young beneficiaries can delay taking money out of the Roth IRA for quite a longer than older beneficiaries. The lifetime expectancy option is usually the best option for a non-spouse beneficiary to keep as much money in the Roth IRA as possible while also reaping the benefits of tax-free returns and growth. Roth IRA Benefit #3: No Early Withdrawal Penalties That’s right! Roth IRA owners are not subject to the 10% early withdrawal penalty for distributions they take before age 59 ½ based on their own contributions or conversions. This is one reason that many investors choose to go Roth-style: the early withdrawal penalty certainly applies to those using 401ks or Traditional IRAs. However, growth and earning are subject to the early withdrawal penalty and to taxes too. But if you do find yourself in a situation where you must withdraw early, you can always take out the amounts you contributed to your Roth IRA or the amounts that you converted. These funds will be available to you tax- and penalty-free. But if you do this, be aware that conversions have a five-year waiting period before you can take out funds while avoiding penalties or taxes. If you’re relying on conversions, you’ll want to let them sit for those five years. Roth IRAs are an awesome resource for investors who are eligible to open them. There are some qualification rules for Roth IRA eligibility that leave out many high-income individuals. But as always, there are loopholes you can exploit in this situation. You can convert your traditional retirement plan dollars to a Roth IRA (sometimes known as a “backdoor Roth IRA”) as the conversion rules. This works and is legally permitted because there is no income qualification level requirement on converted amounts to Roth IRAs. This conversion option has in essence made Roth IRAs available to everyone regardless of income. And everyone includes you. So, are you considering a Roth IRA? Have you already been seduced by this sexy beast of a retirement account? Do you have any more questions? Let’s keep the conversation going in the comments section below. I’d love to hear from you, and will do my best to answer questions with the time I have available.