ACap ReCap: Financial and Tax Tips
ACap Advisors & Accountants is a boutique fee-only Wealth Management and full-service Accounting firm based in Los Angeles. We handle everything from taxes to investments to risk management and estate planning, providing comprehensive, unbiased financial advice in one location. In our ACap ReCap episodes, we discuss the latest financial news, answer the frequently received financial questions, and share financial tips with you. If you have questions or suggestions email us hello@acapam.com Find more details at https://www.acapam.com/ #financialadvisor #fiduciaryfinancialadvisor #finance #financial #money #wealthmanagement #assetmanagement #investment #tax #taxplanning
ACap ReCap: Financial and Tax Tips
What is a Roth IRA and why YOU should have one!
What is a Roth IRA (and why so many people love it)?
Short answer: it’s an individual retirement account you open on your own, fund with after-tax dollars, and—here’s the magic—your investments can grow tax-free and come out tax-free in retirement (if you follow the rules). In this episode, we break down how Roth IRAs work, who can contribute, the 5-year rule, why there are no RMDs, and the biggest mistakes to avoid.
What we cover
- Roth IRA 101: Where it came from, how contributions & tax treatment differ from Traditional IRAs
- Account vs. investment: A Roth is the wrapper—you still have to choose what to invest in
- Who can contribute: Earned-income requirements, spousal contributions, and annual limits + deadlines
- Income phase-outs: How MAGI affects eligibility (and when a backdoor Roth may make sense)
- The 5-year rule: How it applies to contributions vs. earnings—and why conversions have their own clock
- Early-withdrawal exceptions: First-home purchase, qualified education/medical costs, disability, SEPPs, and more
- No RMDs: Why Roth IRAs aren’t subject to Required Minimum Distributions during your lifetime—and how that helps taxes, Medicare premiums, and estate planning
- Real-world math: A simple example comparing Roth vs. brokerage vs. Traditional IRA outcomes
Common Roth mistakes to avoid
- Contributing when your income is too high (and having to undo it)
- Missing the deadline (typically mid-April for the prior year)
- Over-contributing across multiple IRAs (the limit is combined)
- Not investing the cash after you fund the account
- Forgetting the 5-year clock before taking earnings
- Outdated beneficiaries (don’t let assets default to the wrong person)
Why this matters
Used correctly, a Roth IRA can be one of the most powerful, flexible, and tax-efficient tools in your retirement plan—especially when paired with other tax buckets (taxable, tax-deferred, tax-free).
If this helped, follow/subscribe and share the episode. Have a Roth question you want answered next? Drop it in the comments!
Note: Contribution limits, MAGI thresholds, and state tax treatment can change. Check the latest figures and your state’s rules (we’ve linked current limits in the show notes). This episode is for education only—not tax, legal, or investment advice.
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