Roth IRA Benefits: Best IRA with Rising Tax Rates

Major differences between the traditional IRA and Roth IRA

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Estate Planning Benefits from a Roth IRA in Rising Income Tax Rates

Powerpoint slides on a superior retirement planning strategy called Roth IRA on Roids which allows for tax-free distributions, tax-free growth, guaranteed principal and guarateed death benefits.Starting a Roth IRA will become more popular in the years to come because it is likely that the income tax rates will rise and due to this fact, it is the best IRA in rising income tax environment. While most people focus on the income tax benefits of the Roth IRA, there are numerous benefits related to estate planning as well. A Roth IRA has the unique ability of allowing you to leave money to your heirs without leaving them an income tax bill to go along with it. If you had a traditional IRA, income taxes would have to be paid on any amount that is withdrawn from the account. When money is withdrawn from a Roth IRA account, there are no taxes to pay because the contributions were made after taxes were taken.

The second benefit is that you will be able to leave a larger amount of money to your heirs because the money in the account can continue to grow tax free until the date of your death. With a traditional IRA, there are withdrawal requirements that force you to make withdrawals as soon as you reach 70 1/2. For example, if you were to take $2,000 out of the traditional account, you would have to pay $500 in taxes. That's $500 less that you can leave to your heirs. With a Roth IRA, you are not required to receive IRA distributions at 70 1/2. The amount can continue to grow in the account as long as you are alive. The only time your heirs are required to take the money from the IRA is after you die. Similar to the traditional IRA, your heirs can opt to take the money out of the account over their lifetime. While it is in the account, it will grow tax-free. The major difference between the traditional IRA and a Roth IRA is that you do not have to pay taxes when you withdraw from the Roth account after you have reached retirement age.

The third benefit is that you will be able to leave more to your family because you are allowed to continue to make contributions to the account for as long as you live. A traditional IRA does not allow any contributions to be made after the account owner has reached the age of 70 1/2. So, with the Roth account, all the growth that results from contributions made after 70 1/2 will continue to be tax-free for as long as you live and until the money is taken out of the account.

Roth IRA accounts are part of your estate. It is possible to lose a great deal of money in the Roth IRA to federal death taxes, especially if your estate is big enough. While this is a loss, consider the additional losses if the account were a traditional IRA. Your family would then have to pay estate taxes and income taxes on the amount in the account. There is a solution to this double tax trap. Click here for more information on the double tax trap.

Another difference between a traditional and a Roth IRA is that when you place money in to a Roth, you will not get an income tax deduction. However, as long as you follow the simple IRA rules, you will not have to pay any taxes when you take money from your Roth account. Basically, this allows you the ability to trade a deduction on your income taxes for tax-free income when you reach retirement. The question you need to consider is where will tax rates be when you retire? Most experts think they are going higher considering we are at the lowest tax rates in the United States history.

There are strict rules for all IRA accounts and they are enforced by Congress. The rules change often, so be aware of all current rules that apply to IRA contribution limits and withdrawal penalties and policies. If you currently have a traditional IRA account, you can convert the account to a Roth so you can take advantage of these benefits.

To summarize, we're in an era of the lowest tax rates in U.S. history and tax increases are foreseeable given Obama's plan and thus anyone trying to save and protect themselves should consider asset protection and estate planning with an irrevocable trust to circumvent estate taxes – the only tax you can legally select to forfeit. Experts agree, they should also consider putting some of their nest egg into a tax efficient structure like the Roth IRA or Roth on Roids™. Learn more about the tax sttructure in a table comparison format here: Traditional IRA, Roth IRA, Roth on Roids Table. Contact us to help you determine what is the best IRA and to walk you through these details.

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.

If you are seeking for the best return on your IRA and Roth IRA investments while reducing your taxes then call us now for your initial, completely FREE, no obligation, no sales pressure, 100% total & complete client privacy consultation. Call us toll-free now at 888-93-ULTRA (888-938-5872)!

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