Retirement Accounts: Roth IRA, 401k, 403b, Traditional IRA

What the Best IRA? Whats Better than a Roth IRA?
What is Tax-Exempt? What is Tax-Deferred?

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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.Being a huge fan of investing in Roth IRA retirement accounts, I was recently speaking with a friend who had some misconceptions. She had made mention that she should begin to invest in a Roth IRA. While we were talking, I found out that she thought all retirement savings accounts meant that the money in the account would be tied up until you reach the age of at least 59 1/2. When she came to the realization that there are many ways to make IRA withdrawals before reaching that age, she quickly became very interested in how a Roth IRA could be of benefit to her.

Retirement Accounts: 401k, 403b, traditional IRA

Retirement accounts such as 401(k)s, 403(b)s and traditional IRA accounts are tax-deferred. This means that all money that is contributed to the retirement account is done so before any taxes are paid. This is the reason why your W2 can show a lower gross income amount. The money was placed into the tax-deferred account for retirement before taxes were calculated and deducted. Your federal and state taxes are based on your adjusted gross income, known as AIG. By making use of these tax-deferred retirement accounts, your AIG can be reduced.

Differences of a Roth IRA

Roth IRAs differ from these types of retirement accounts. A Roth IRA account is tax-exempt. This means that the contributions that you make to the account have already been taxed. This does not result in a decrease in your taxable income, but it does allow for you to withdraw from the account when reaching retirement age without having to pay any taxes on the withdrawn amount. In addition, you can withdraw your contributions before reaching the age of retirement without incurring any penalties. The five-year tax rule does apply to contribution withdrawals. If you leave all of your money in the Roth IRA account, you will earn more dividend, but the account is very flexible and offers you numerous options if you need to withdraw some of the funds before reaching age 59 1/2. Just be sure to adhere to the IRA withdrawal rules so you don't incur any penalties.

It is important to be aware of the Roth IRA contribution limits. In 2009, the limit is $5,000 for all single and married taxpayers. If you do not follow the withdrawal rules, there will be penalties. However, keep in mind that you can contribute money for the 2008 and 2009 year until April 15. This will allow you to be one year closer to the five year magic number without having to actually wait five calendar years.

Investing in Your Roth IRA

You can invest the funds in the Roth IRA in many ways, including mutual funds, certificates of deposit and money market accounts. Individuals are allowed to have more than one retirement savings account. While you can only have one Roth IRA, you can take part in a 401(k) plan offered by your company. Utilizing multiple retirement accounts will help you save even more for those retirement years ahead. It is always best to make the maximum allowed contributions to your Roth IRA account. These contributions will be greatly appreciated upon retirement when you will have a tax-free source of income.

Then my friend found out that she could not open a Roth IRA because she earned more than $116,000 a year. But for her and people like her there is definitely a solution. There is a solution better than a Roth IRA because your account can never go negative with the stock market and even grows tax free and has a guaranteed minimum rate of return as well as a death benefit. It is called Roth on Roids™ It is even better than an annuity because when you take money out it is income tax free. When my friend found this out she wondered why I even bothered telling her about the Roth IRA all-together. Read more about a Roth on Roids™ account.

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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