THE ROTH IRA: BUILDING BLOCK FOR A COMFORTABLE RETIREMENT

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.

Most people have their own ideas of what constitutes a dream home -- the perfect location, just the right features and a decor to suit their tastes. Building that dream home requires thorough planning.

Most of us also dream of a financially secure future -- and that dream requires a thorough blueprint, as well, featuring a variety of building blocks such as employer-sponsored retirement plans, 401(k)s and IRAs.

Just as a contractor must select the right materials for a building, so must retirement savers choose the right combination of tools. Understanding the benefits and restrictions of each is key to choosing the tools that are right for you.

Many people are flocking to the newest building block for retirement, the Roth IRA. This option can be an excellent financial tool for millions of Americans. Single people with adjusted gross income up to $95,000 and couples with AGI up to $150,000 can contribute up to $2,000 to a Roth IRA.

Contribution to Roth IRAs are not deductible from your income each year, but earnings in a Roth IRA grow tax-deferred. In addition, withdrawals are tax-free if they meet two conditions: (1) the assets have been in the account for five years, and (2) the withdrawal is made after age 59 1/2 or for a qualified purpose (death, disability or up to $10,000 for a first home).

Two more advantages of Roth IRAs are that they allow contributions after age 70 1/2, and they do not require minimum distributions once you reach a certain age.

Even if you already have a traditional IRA, you can open a Roth IRA if your income is within the limits. You can have either or both types of IRAs, but your total contribution each year cannot exceed $2,000. In addition, if you convert all or part of a traditional IRA into a Roth IRA, you'll owe taxes on any amount converted.

Whether a Roth IRA is an appropriate building block for your retirement plan depends on your specific situation and goals. Get your financial house in order for retirement. Learn about Roth IRAs and other retirement-saving options, and explore the different ways they can fit into your financial blueprint.

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