There are now two basic types of IRAs. The
original is known as a "Traditional" IRA and the new
account type is now called a "Roth" IRA. The
Traditional IRA is still deductible within certain guidelines
- now up to $ 3,000 per taxpayer per year. (some can do
more to catch up under new laws, but income limits still apply)
The "Roth" IRA was created in
1997 and allows conversion from "taxable" to
"tax-free" status by making a "Roth"
election with your fiduciary holding your IRA account(s). This
conversion is taxable as ordinary income.
For young IRA owners, it makes a lot of
sense as you will have many years to make back the costs
associated with conversion. Once you reach age 59 ½ and after
five (5) short years have expired, you can take out all of the
income from a Roth account each year and owe no taxes!
When you combine the long-term benefits of
paying your taxes once and for all on these dollars - recovery
time can be fairly short in certain investment portfolios such
as equities. But, you can now cut the
recovery time to Zero if you combine a Roth IRA conversion with
a professionally prepared "Legacy IRA" beneficiary
election form.
This combination allows you to throw away
the Roth IRA calculations for recovery because you will have
created a tax-free income stream for not only yourself and your
spouse (if married), but your children or grandchildren as well!
You very well could produce a 100 year plan for income that will
be exempt from Federal Income Taxation!*
And some can just consider keeping their
IRA taxable, but add our Legacy IRA beneficiary form to their
current account to make sure the taxable income gets stretched
way out to the life expectancy of their children.
(Delaying taxation is one of the three D's to apply to your
money. Call us to find out the other two!!!)
All of these financial strategies
regarding your IRA type accounts are generalized here and need
further investigation, projections, study and discussion in
order to achieve a creative approach and use the most modern
concepts to stretch your IRA asset dollars as far as possible.
ASK US for a free analysis to determine
your needs and the potential for a "100 Year"
distribution plan with you and your family.
