Marine Corps Officers MUST be knowledgeable when it comes to investing. Not simply for their own benefit, but more importantly for the Marines whom they teach financial management. The Roth IRA should be one of the first things you teach your Marines. The Roth IRA is an retirement account that offers a future tax-free retirement income. The idea behind the Roth IRA is that you pay taxes now in order to free yourself of such a burden later on. The investment account is a sensible option for those who expect to be paying a higher tax rate during retirement. If you are not making a whole lot of money now you can minimize future taxes by paying up-front at your current lower rate.

Marines and Marine Corps Officers Are Eligible

There are eligibility requirements for the Roth IRA. However, given that you have chosen a career in the military you likely won’t be making enough money to warrant exclusion from this investment option.

Here is the official Amount of Roth IRA Contributions That You Can Make for 2014

If your filing status is… And your modified AGI is… Then you can contribute…
married filing jointly or qualifying widow(er)

< $181,000

up to the limit

> $181,000 but < $191,000

a reduced amount

> $191,000

zero
married filing separately and you lived with your spouse at any time during the year

< $10,000

a reduced amount

> $10,000

zero
single, head of household, or married filing separately and you did not live with your spouse at any time during the year

< $114,000

up to the limit

> $114,000 but < $129,000

a reduced amount

> $129,000

zero

More to Know

As I explained, the main benefits to having a Roth IRA is the future tax benefits you will receive. There are some additional considerations you should take into account.

  • You have a 15 month window to contribute (e.g., January 1, 2014 to April 15, 2015)
  • You can’t contribute any more than you make (e.g., if your income is only $2000 for the year you can only contribute $2000 of the $5500 max)
  • Age is not a factor to eligibility
  • There is no requirement to start withdrawing (with a traditional IRA you have to start withdrawing at 70 ½)
  • If your spouse doesn’t work you can contribute to their Roth IRA

Early Withdrawals

It is incredibly important for Marine Corps Officers to educate their Marines about how early withdrawals work with the Roth IRA. In most cases, withdrawals from a Roth IRA before 59 ½ will be subject to a penalty.  One could end up paying a 10% early withdrawal fee + taxes on the Roth’s earnings + income tax. There are ways to avoid some of these penalties such as disability, death, medical expenses, first-time home purchase (up to $10,000), higher education expenses, and ironically to pay taxes owed to the IRS.

There is no doubt that a Roth IRA is a solid investment choice for Marine Corps Officers and the Marines they lead. The retirement account affords you a wide variety of investment options such as mutual funds, brokerage (stocks, bonds, and other securities), CDs, and more. I encourage everyone to do their research and compare the varying opportunities in order to find the best option for you.