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 Contributions are withdrawn at any time with no tax consequences. Earnings and capital gains can be withdrawn on a tax-free basis if a qualified distribution is made:

• at least five years after your first contribution, and

• you have attained age 59 ½ or due to death, 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 can make contributions as long as you have earned income, no matter how old you are. With traditional deductible IRAs, you must stop making contributions when you reach age 70 ½.

• Mandatory withdrawals after age 70 ½ are not required. You can take out as much or as little as you want, whenever you want, after age 59 ½. If you don't need the money, the balance can continue to grow on a 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 of the advantages, retirees with earned income should definitely take a look at Roth IRAs.