Dividend Stocks Work Well In Your Roth IRA

One of the best long-term retirement strategies an investor can use investing in dividend-paying stocks within their Roth IRAs. Roth IRA Distributions, including capital gains, interest, and DIVIDENDS are tax-free if you are at least age 59 1/2 years old, and the account has been established for longer than five tax years. Dividends paid into a Roth account are never taxed, even when withdrawn.

This special treatment differs from dividends accumulated in a Traditional IRA, which would be taxed during withdrawals. Do remember, though, that withdrawals taken from an IRA account before age 59 1/2, including income from dividends, is subject to a 10 percent penalty tax in addition to ordinary income taxation. Always consult with a tax specialist before making any moves that may incur tax consequences.

Source: Dividend.com

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