Roth IRA Plans

This are the next generation of retirement accounts. Roth Plans are the new retirement savings programs with very similar benefits of a regular IRA. The main difference between the two is: First and foremost there is no Income Tax Deduction for contributions made to the ROTH IRA. In exchange for giving up the current tax deduction if you delay taking your withdrawals until after age 59 ½, the withdrawals, including all of the earnings on the account, will come out INCOME TAX FREE. This is based on current tax law. I currently have many retired clients who only had available to them regular IRA’s.

Businessman using binoculars, money reflected in the lens

Now they are retired and being forced to take their money out of their IRA’s this is causing them to pay more in taxes now than they would have had to pay if those monies were coming out income tax free. In fact every time when I have done a quick analysis, I have concluded the taxes saved by having a tax deduction when the contribution or deposit was made to the IRA in the past have now been recouped by the IRS. My clients have now paid more in income tax than they received the benefit of the tax reduction in their working years.

When it comes to retirement planning, it is critical to take into account the income tax consequences. In my opinion, the income tax schedule we have today is lower than we will see in the near and distant future. In other words, I feel like Federal Income Taxes are the lowest we shall see very long time. Income tax rates are on sale! In fact I believe we are seeing them at “Fire Sale” levels. Take advantage of the situation today!