Do you have a Roth IRA? If not, you need to get one. 401k plans are great and so are pension plans (if you're lucky enough to still have one), but I believe the best road to riches for most investors is via the much-celebrated but under-utilized Roth IRA.
Tax-Free Income For Life!
You'll sometimes hear the above phrase during high-pressure sales pitches on late-night infomercials, or perhaps at one of those "get-rich-quick" seminars. Most people are immediately on their guard when they hear such claims because hey, the only sure things in life are death and taxes, right? Well, yes. But Roth IRAs offer an intriguing tax proposition: tax-free income at retirement. Think how far your income would stretch if you didn't have to pay income tax on it. You wouldn't even need to rely on unattainably-high Roth IRA rates of return to generate a large enough pile of capital to generate a modest tax-free income.
What's The Catch?
There's always a catch, isn't there? In this case, the catch is that you're trading a current tax break for a future tax break. Traditional IRA's, 401k plans, and the like offer an immediate tax deduction: if you contribute $10,000 to your 401k plan at work, you are also reducing your current taxable income, that is, if you're in the 25% federal tax bracket you are effectively saving $2,500 in taxes by contributing $10,000 to your 401k.
With a Roth IRA, you pay taxes upfront in exchange for not having to pay any taxes on your gains in retirement. For young investors in a low tax bracket (and likely to be in a higher tax bracket later on in their career and in retirement), a Roth IRA is practically a slam dunk; you'd be a fool not to max out your contributions every year. Even if you expect to be in right about the same tax bracket when you retire, you're likely to come out ahead in the long run by going with a Roth IRA instead of a 401k, and that's not even taking into account the fact that congress will likely raise income tax rates eventually.
So if you're not already contributing to a Roth, what are you waiting for? The Roth IRA deadline isn't until April 15th, so go max out your contribution for last year and get a head start on this year's contribution right away!
Check Out Roth IRA Deals At Amazon
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An IRA Owner's Manual List Price: Sale Price: $17.56  |
DescriptionWith pensions disappearing and other sources of retirement income going away, never has the IRA been a more important part of our lives and our futures. The trouble is, no one has ever explained how to use these things – how do I set one up? How much can I put in there? When can I take it out? IRAs need an owner’s manual! It’s finally here... |
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The Kid's ROTH IRA Handbook: Securing Tax-Free Wealth From a Child's First Paycheck or Money Answers for Employed Children, Their Parents, the Self-Employed and Entrepreneurs Sale Price: $16.95 |
DescriptionThis book is to be used as a starting point for children and parents. The focus is on the unmarried dependent child (with no dependents of their own) who has a yearly income that ranges from $1.00 to the amount of the single standard deduction allowed by the IRS for the current tax year ($5,350 in 2007)... |
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What's So Great About a Roth IRA? Easy, Complete Guide to Powerful Tax Savings with Roth IRA's |
DescriptionThis book will clearly show you the powerful tax-savings strategies behind the Roth IRA, including recent changes in tax laws that make it even more advantageous to start now. This easy and complete guide to Roth IRA's will help you quickly and easily cut through all of the Roth IRA rules, while avoiding the potential land mines along the way, including:• The main differences between a traditional IRA and a Roth IRA;• Roth IRA contribution limits;• Roth IRA conversion rules;• The right way to pay your taxes and set up your Roth IRA;• How to use a Roth 401k with a Roth IRA for even more powerful tax savings;• How to keep the tax – free funds flowing with inherited Roth IRA’s;• And much more in a concise and easy to follow guide. |
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The Gospel of Roth: The Good News About Roth IRA Conversions and How They Can Make You Money List Price: Sale Price: $18.76 |
DescriptionTHE ROTH CONVERSION OPTION if you follow my advice in the next few pages, you may increase your retirement spendable assets by over 40 percent! Everyone should 1 convert all of his or her IRAs to Roth IRAs on January 4, 2010... |
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Go Roth! 2009: Your Guide To The Roth Ira, Roth 401K And Roth 403B Sale Price: $19.95 |
DescriptionThis plain language book makes it easy to learn how you can get the most from Roth accounts, including Roth IRAs and Roth accounts in 401k and 403b plans. It helps you determine whether a Roth is your best choice, and takes you through all the rules and strategies for creating, maintaining, and using your account. |
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