Retire Tax-Free With a Roth IRA

 

My favorite retirement and investment vehicle by far is the Roth IRA (or Roth 401k). Many advisors have been telling folks to ignore this valuable tool because you don’t get a tax deduction on your contributions.

Think about it, if your tax planner or CPA is expected to get you the best deal on your (or should I say off of your) taxes now, why would they recommend that you contribute to a plan that offers no immediate deduction of income? Many don’t. Many more won’t.

If this is the advice you have been receiving, you are going to have to make up your mind now. Which is more important to you? Do you want a tax deduction now, or tax-free income for the rest of your life? That really is the question.

If you go the Roth route, you won’t get a deduction, but all the growth inside of your account will be Tax-Free when you start pulling money out! If you play your cards right, you can end up with a HUGE account that can serve you well in your golden years. You can even pass this onto your heirs.

You can set up a Roth with your broker or maybe even your bank. Look for the ones that charge the lowest fees. Many won’t charge you any fees, and those can be great. Keep in mind that you can have more than one Roth set up. You don’t have to put all of your eggs in one basket.

If you are going to trade stocks inside of your Roth, why not take the Scottrade or Etrade account (or any broker you prefer) with no fees.

However, if you want to do real estate or other not so main stream type of investing inside of your Roth, you are going to need to hire a third party administrator. Again, keep your stocks, ETFs, and anything you can buy from a broker in that fee-free account. The third party or “Custodian” is going to charge you some fees. But, it may well be worth it.

Also, if you are going to be actively trading futures or commodities inside of your account you may have to go with a custodian.

Can you imagine making a real estate transaction that you earn $50,000 on, and not having to pay one thin dime in taxes? That sort of thing is being done all the time inside of Roth accounts, even though many CPAs have advised against it.

If the investment is inside of your Roth you don’t have to worry about holding it for a year or longer to get to a long-term capital gains situation. It doesn’t matter if you hold the investment one year or one minute, you won’t pay a dime in taxes with a Roth! Meditate on that and see if it doesn’t get your strategies rolling!

Why not take full advantage of the Roth, and take the tax man completely out of your pocket by setting up your account today!

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