Roth IRA-Individual Retirement Account
Contribution limits of ROTH IRA, Pros & Cons of ROTH IRA. Briefly discuss ROTH on ROIDS™, Cash Value Life Insurance, Modified Adjusted Gross Income
What's wrong with ROTH IRA and other traditional IRAs and 401Ks? Qualified contributions are "peanuts" for those of us in high income tax brackets. Contribution limitations are too restrictive. There are countless complex rules to qualify, withdrawals are too restrictive, transactions are too restrictive, and for most of us — it's financially too risky when pegged to the ups and downs of the stock-market, the housing bubble, the declining dollar, and the rate of inflation.
What's good about ROTH IRA is that withdrawals are tax-free. Once the account is "seasoned" meaning that the account must be in existence for a minimum of 5 years, withdrawals after attaining your age 59 1/2 or the owner is disabled, are considered qualified and tax-free.
What's superior to a ROTH IRA? An infinite ROTH IRA — a ROTH on ROIDS™ (ROTH on steROIDS™). There are no contribution limitations, no complex rules in order to qualify, your money never goes backwards (no loss of market risk, no ups and downs with the stock-market), your transaction interest, dividends, and capital gains accumulate tax-free, and when correctly structured distributions are tax-free. For those of us in the higher tax brackets it's one of the last tax-free strategies in the face of diminishing IRS loopholes.
The "infinite ROTH" is Cash Value Life Insurance. There are NO limitations on the amount you can fund into a cash value life insurance. No complex rules to qualify. You may fund with $20,000; $30,000.00; $100,000 per year and higher. The only limitations are your insurability and the size of your pocketbook it's a ROTH on ROIDS™. The primary financial goal is tax-free growth and tax-free distributions; the secondary goal is the life insurance death benefit.
For years and years, I hated insurance sales people where the word "no" meant I'll call back tomorrow, and tomorrow, and tomorrow. Finally, I have come to the conclusion that insurance has a place within our tax-advantaged investment horizon. Appropriately positioned, it's the last tax-free Loophole. Insurance companies do not pay income taxes. Investments within the insurance company are not taxed (think of it like a safe-deposit box inside the insurance company, much like your safe-deposit box inside your bank), and with new insurance products, they have convinced me to take another look, sure enough, it worth your consideration: tax-free growth, tax-free distributions, and if suitably prearranged —tax-free death benefit.
This statement is required by IRS regulations (31 CFR Part 10, §10.35): Circular 230 disclaimer: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Rocco Beatrice, CPA, MST (Master of Science in Taxation), MBA (Master of Business Administration), BSBA (Management/Accounting), CWPP (Certified Wealth Preservation Planner), CMMB (Certified Mortgage Broker), CAPP (Certified Asset Protection Planner), Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an asset protection, award-winning trust, estate planning and tax expert.
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