subject: Real Estate Relocation in Your Roth IRA on Roids by:Rocco Beatrice [print this page] Now, if you have cash lying around, thats even better. Did you lose money in 2008 and 2009 in the stock market? Did you lose money in real estate? And do you still have money left in treasury securities, or CDs, and what are you going to get out of that - 2 or 3%? Well, isnt it better to put it to work in something that give you a guaranteed minimal return and the principle is guaranteed? Do you want to eventually get tax-free retirement income? Obviously, we all dont have $100,000 cash lying around, but we do have equity in our homes which we can reposition, or other real estate such as commercial estate property. but it definitely is better to have your money grow in a taxable environment as opposed to a non-taxable tax free retirement income. You may use the returns from the repositioning of your real estate for retirement income or for other reasons such as an emergency fund. Your money can grow at an average of 7% tax free and currently you can borrow at 4 to 5% so, financially, the numbers make a lot of sense.
Here is another example, if you are 45 years old and deposit $100,000, at 65, you will have $600,000 of tax free income. Thats a great asset allocation model.
So, whats next? Has your accountant or financial planner asked if you have given any thought to converting your traditional IRA to a Roth? In 2010, as it stands right now anyway, if you decide to convert your traditional IRA to a Roth IRA, the government is going to drop the limitations and theyre going to allow you to pay the income tax due over a two year period that is, in 2011 and 2012. Now, let me ask you a question. Which is better? To pay the taxes when you buy the apple tree or when you pick the apples? The traditional IRA requires you to pay the taxes when you pick the apples. And so if you pick apples year after year, youre going to pay taxes on every single apple that you decide to pick. Thats what the traditional IRA is about. You save the taxes when you buy the apple tree and you pay the taxes when you pick the apples. The exact opposite is true for a Roth IRA. You pay the income tax when you buy the apple tree, you nurture the apple tree and make it grow and finally, you can pick as many apples as you want without incurring an income tax.
Roth on Roids is better than the Roth IRA; however, there is one main similarity. You have to pay the taxes when you buy the apple tree (i.e. before you pick the apples). In other words, you dont have to pay taxes when you pick the apples (i.e. after your already purchased the apple tree); in spite of that, with the Roth IRA there is no guarantee of a return and youre going with the ups and downs of the stock market, the commodity market or the real estate market. With Roth on Roids, the principle is guaranteed; you will never lose your money because youre guaranteed by an insurance company whose sole purpose is to roll the money tax free and then borrowing against it the cash builds up tax free. Likewise, when you go to a bank, you borrow money; its not a taxable transaction.
On conversions, the government is inducing you to pay the taxes now, to transfer the money into a Roth IRA. This conversion, over 18 trillion dollars has not been taxed in qualified retirement money. Approximately 9 trillion dollars is in individual retirement accounts, traditional IRAs. In 2010, you can withdraw the money, pay the tax, and put it in a Roth. The third choice is to take the money, pay the taxes and go into a Roth on Roids. No earned income, no age qualifications. The Roth on Roids still has a government intubation. Its a government sponsored program.
With this being said, there is a word of caution. The government as of late has been buying banks and significant shares of the bankrupt General Motors and almost defunct Ford. In essence, they will be running the economy. They also seem to be haphazardly making and printing money without major forethought a trillion dollars here and a trillion dollars there. Its the government's spontaneous change of mindset that worries me. With such a significant asset class under their control (this includes the Roth IRA) they can easily and spontaneously change the rules and apply some new tax upon the IRA account or they can just as easily require a mandatory distribution. This is a possibility. Politicians change their minds everyday and, well, well have to leave it just at that. Actually, Im a little bit worried about that because I think theyre acting like theyre protecting themselves against us the tax payers. However, thats another discussion for another day.
Contact your financial planner or accountant for more information on the Roth IRA on Roids and relocating your real estate or Call Best IRA for more information about your own specific IRA conversion retirement planning. I believe you should strongly consider the Roth on Roids as part of your asset allocation strategy today.
About the author
Best IRA Rescue provides services on your IRA investments and traditional IRA and will help you reduce your inherited and beneficiary independent retirement account taxes in your estate assets. Roth on ROIDS is your advanced Roth IRA retirement planning strategy and one of the best IRA tax-savings strategies with benefits of a guaranteed death benefit, guaranteed principal, tax-free growth, and tax-free distributions from policy loans.
