What is a roth ira uk? A Roth IRA is not available in the United Kingdom, however UK investors have access to a range of tax-efficient alternatives. These include SIPPs and ISAs that offer similar objectives of tax-free long term investment growth.
What is UK equivalent of Roth IRA?
In the US, the Roth IRA is an individual retirement account (IRA) that allows investors to make contributions with after-tax income and then invest those funds for retirement. Roth IRA holders can withdraw their account earnings without penalty in retirement and distributions are generally tax-free.
In contrast, traditional IRA accounts allow participants to deduct their contributions and then pay taxes on account earnings when they withdraw the money. However, there are a number of requirements that must be met in order for withdrawals to be considered qualified. For example, an IRA holder must have been at least five years old when they first made the contribution, the account must be established and funded before the holder turns 70 1/2, the account holder must have earned income and not just capital gains, and the withdrawal must be used for retirement or other qualified purposes.
As an expat in the UK, you may be interested to learn that there are a number of tax-efficient savings options available. For example, the UK stocks and shares ISA allows people to contribute up to £20,000 a year. This is significantly higher than the $6,000 limit of a Roth IRA. The ISA also permits you to invest in a wide range of assets, including bonds, shares, and ETFs.
