NO AGE RESTRICTIONS ON ROTH IRA (FINANCIAL FOCUS)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Not too many years ago, "retirement" meant a true cessation from work, but today more and more retired people are choosing to consult, work part time or even open a small business. Do you plan to follow one of these paths? If so, then the money you earn will help you maintain the lifestyle you want in retirement. Plus, you'll receive another bonus from your labor you get to continue contributing to a Roth IRA.

As you may know, Roth IRA earnings grow completely tax-free, provided you've had your account for at least five years. That's a big plus, but there are other benefits:

* You can make contributions as long as you're working. With a traditional IRA, you cannot make any contributions past age 70 1/2. However, as long as you continue to earn income, you can contribute up to $2,000 a year to a Roth IRA, and if you have at least $4,000 in earned income, you also can contribute to your spouse's Roth IRA, even if your spouse doesn't have earned income.

* You won't be forced to make withdrawals. Once you reach 70 1/2, you have to make minimum withdrawals each year from a traditional IRA, even if you don't need the money. Plus, you'll have to pay income taxes on your withdrawals. A Roth IRA has no such requirement; you can keep the money in your account for as long as you choose.

* Your family pays no income taxes on inherited Roth IRA funds. You may not outlive the money you have accumulated in your Roth IRA. If that happens, you can leave the assets in the account to your heirs, and they won't have to pay income taxes on it. (However, Roth IRA proceeds may result in increased estate taxes.) On the other hand, your heirs would have to pay regular income taxes on any money they withdraw from an inherited traditional IRA.

Of course, you may already be contributing to a traditional IRA. Should you convert this account to a Roth IRA if you plan to continue earning income during your retirement years?

There's no one right answer to everyone, but you need to be aware that you will have to pay increases on the entire converted amount. That could have a significant impact on your tax situation; you may be better off withdrawing the funds you need each year from your traditional IRA and paying income taxes on the withdrawals. Even if you choose this route, you can still open a new Roth IRA.

Before you make any IRA moves, you'll need to consult with your tax adviser, but if a Roth IRA is appropriate for you, you'll find that it can be an excellent investment for your retirement years even if you're not really "retired."

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.