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Roth IRAs

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A Roth IRA (Individual Retirement Account) is an investment account that you set up on your own at a bank, credit union, or other financial institution. It is similar to an IRA, but you have to pay taxes on it now. However, you generally will not have to pay taxes on the money you take out when you’re ready to retire.  

 
Should I use a Roth IRA to save for college?
Usually, a Coverdell Savings Account or a 529 account are better choices for saving for college than an IRA. However, some people do use Roth IRAs to save for college expenses if:
  • They’re not sure if they will use the money for college expenses
  • They’re worried about having a financial emergency (Roth IRAs allow you to take out some money without tax penalties)
Other things to think about before deciding:
  • To avoid paying taxes on the interest you earn in a Roth IRA, you must follow certain rules about how long you must leave your money in the account.
  • Money in a Roth IRA, and whatever you take out of a Roth IRA, may affect your eligibility for financial aid. 
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