Every so often, the federal government enacts something that proves to be brilliant. Okay, it is a rare event, but the Roth IRA represents a really effective tool for most retirement planning.

The first question for most people is where the heck did the name come from? The name comes from the Senator that sponsored the original bill. He was the now famous William Roth, Jr., the Senator for Delaware and a member of the Republican Party.

As you might guess, the Roth IRA is a variation of the hugely popular IRA. IRA stands for individual retirement account. Both are representative of efforts to motivate Americans to save for their retirement and take the burden off a social security system that has an iffy future at best.

So, what are the benefits of a Roth IRA? Well, there are many. The most touted has to do with the tax treatment of the investment. Simply put, the money distributed from a Roth IRA is TAX FREE. If you invest in the account for 5, 10, 20 or how ever many years, you should build up a nice chunk of change. Whatever the amount you end up with, you can take it all without paying taxes when it is time.

The disadvantage of a Roth IRA compared to a traditional IRA has to do with the upfront contribution. With a traditional IRA, you can deduct your initial contribution from your taxes. You cannot do this with a Roth. This disadvantage, however, is minor considering the huge benefit you get with the tax free distribution. In contrast, the distributions from a traditional IRA are taxed as income when you retire.

The tax treatment of a Roth IRA is a tremendous advantage, but it is no the sole one. Yep, there is more to make this retirement tool attractive. Since you are funding it with after tax money, the rules for accessing it are fairly loose. Let's assume you run into a problem and need money now. At any time, you can withdraw your total contributions to the Roth IRA with no tax consequence.

Another tremendous advantage is the lack of a forced distribution. Once you hit the magic age of 59.5 years, you are forced to start withdrawing money from most retirement vehicles. This can lead to a jump up in the income tax bracket. With the Roth IRA, there is no such requirement. As a result, you can create a strategy that allows you to take out what you need without suffering the consequences of being bumped into a higher tax bracket.

At the end of the day, using a Roth IRA to help fund your retirement just makes sense. Make sure to speak with your financial advisor regarding your options.

Learn more about your retirement planning options by talking with a financial advisor at UFCAmerica.com.