5 Reasons Investors Love Roth IRAs

Roth IRAs are popular accounts for retirement investing, and with good reason. These accounts offer plenty of benefits that make them an ideal vehicle for investing for your future.

Here are five big reasons investors often love Roth IRAs.

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1. Tax-free growth

Roth IRA accounts offer tax-free growth. If your investments perform well, or if you have a long investing timeline and benefit from the power of compounding, you can find yourself with a huge amount of gains that go untaxed.

You also don't need to worry about trying to manage capital gains taxes, as you would if you had a taxable brokerage account. You can just buy and sell assets within the Roth and reinvest any gains to grow your wealth faster.

Of course, you don't get the benefit of being able to invest with pretax dollars when you choose a Roth IRA. However, you may end up far better off passing up that tax break -- which traditional 401(k) and IRA accounts provide -- if your tax rate or portfolio balance increases substantially.

2. No required minimum distributions

Not having to take required minimum distributions (RMDs) is another huge perk of Roth IRAs. You don't have to worry about withdrawing money on a schedule set by the IRS, as you would with traditional retirement plans. You can leave the money in your Roth IRA to grow as long as you'd like, withdraw it only when you need it, or even pass most of it on to the next generation.

3. Penalty-free access to contributions

With most traditional tax-advantaged accounts like 401(k)s or IRAs, you typically cannot take money out before age 59 1/2 without facing penalties.

With a Roth IRA, you can withdraw contributions you made at any time, penalty-free. As long as you follow IRS guidance for making sure you don't take out earnings early, having the ability to access your contributions when you need them gives you much more flexibility.

4. No Social Security tax

Roth IRAs can also help you make another source of retirement income go further. Distributions from a Roth do not count in the threshold to determine if your Social Security benefits are taxable.

These thresholds are relatively low. Benefits start to be taxed at $25,000 in provisional income for single filers and $32,000 for married filers, with provisional income equaling half your Social Security, all taxable, and some non-taxable income. So being able to make unlimited Roth withdrawals without triggering Social Security tax is a huge advantage.

5. Tax-free withdrawals

Finally, of course, you get the benefit of tax-free withdrawals in retirement. This means you don't need to worry about the possibility that rising tax rates will cause you to keep less of your retirement savings.

You do need to follow all IRS guidelines for Roth distributions to be tax-free, including making sure you're 59 1/2 or fall within an exemption to the age requirement, and fulfill the five-year rule. As long as you follow these requirements, you get your money with no taxes taken out to enjoy in your later years.

All these benefits make Roth IRAs a great option, and it's easy to see why investors love these accounts.

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