Homebased business owners looking toward retirement have an interesting new investment option this tax year--the Roth IRA. Like traditional IRAs, qualified individuals can put up to $2,000 per year in a Roth account. Unlike the typical IRA, however, the Roth IRA permits tax-free earnings and tax-free withdrawals for persons over age 59 1/2 who have contributed to the IRA for at least five years. In addition, Roth IRAs allow penalty-free withdrawals for such expenses as buying a first home and paying for college, although a five-year aging period may apply.
Combined with the SEP IRA for self-employed persons, the Roth IRA is a significant incentive for saving, according to Judith McMichael, vice president of Fidelity Investments in Boston.
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