Roth IRAs are a flexible way to save for retirement. Contributions can be withdrawn at any time with no tax consequences. Earnings and capital gains may be withdrawn on a tax-free basis if a qualified distribution is made:

• at least five years after your first contribution, and;
  
  
• after you have attained age 59 1/2, due to death or disability, or to pay up to $10,000 of first-time home buyer expenses.

Other characteristics of a Roth IRA may make it an attractive investment for retirees:

• You may make contributions as long as you have earned income, no matter what your age. With traditional deductible IRAs, you must stop making contributions when you reach age 70 1/2.
  
  
• Mandatory withdrawals after age 70 1/2 are not required. You can take out as much or as little as you want, whenever you want, after age 59 1/2, as long as the account has been open for five tax years. If you don't need the money, the balance can continue to grow on a potentially tax-free basis.
  
  
• Qualified distributions from Roth IRAs are not included in AGI. Thus, these distributions will not affect income taxation of your Social Security benefits.
  
  
• Roth IRAs can provide a tax-advantaged way to accumulate assets for heirs. Both traditional and Roth IRAs are subject to estate taxes. However, the beneficiaries of a traditional IRA must also pay income taxes on the proceeds, while beneficiaries of a Roth IRA receive qualified amounts income-tax free.

With all the advantages, retirees with earned income should definitely take a look at Roth IRAs.