Retirement Planning BlogRoll

So, what’s 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 they’re 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, you’re going to pay taxes on every single apple that you decide to pick. That’s 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 don’t 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 you’re 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 you’re 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; it’s 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. It’s 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. It’s this spontaneous change of mindset of the government 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, we’ll have to leave it just at that. Actually, I’m a little bit worried about that because I think they’re acting like they’re protecting themselves against us – the tax payers. However, that’s another discussion for another day.

Call us 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. Call us today toll-free at (888) 938-5872 or (508) 429-0011 for your Best IRA Rescue Plan. We are open 7 days a week.

Now, if you have cash lying around, that’s 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, isn’t 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 don’t 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. 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. That’s a great asset allocation model.

Contact us toll-free (888) 938-5872 or (508) 429-0011 for your Best IRA Rescue plan today. We are open 7 days a week to take your calls and answer your questions for a free and private, initial consultation.

Now that Gold is nearing $1000 per ounce again there is renewed interest in IRA and retirement plan investing using a Gold IRA.  A question frequently asked is, “How do I set up a precious metals IRA?

Rolling over or transferring your Traditional IRA or Roth IRA into a self directed precious metals IRA can be a simple procedure.

First, apply for a self directed Gold IRA with the company you have selected to transfer or rollover your existing Traditional IRA, Roth IRA, or 401(k) to. Reassign cash or securities to open the precious metals IRA. You may want to consult with a financial advisor specializing in Gold IRAs, who can help to advise and guide you, if you feel uneasy with this process.

Second, you will need to select a trustee, also with the guidance of your precious metals IRA advisor, and store the precious metals with a custodian. The custodian will charge a fee for this service. Most companies will refer you to a custodian and provide you with the proper paperwork.  It is really that simple.

It is important to understand that only specific coins and bars qualify to be held in a self directed Gold or Precious metals IRA:

-24 karat gold bars (with NYMEX or COMEX approved refiner hallmark)

-24 karat gold coins (22 karat US Gold Eagle coin is an exception)

-Silver coins or bars (.999+ only)

-Platinum or palladium bars or coins (.9995+ only)

Other important information to consider:

-Gold IRAs are not FDIC insured

-Your principle is at risk

-The cost of storage

Now that I have described to you, shared with you, how you can contribute to a Roth IRA on Roids with a guaranteed return on your contributions (read my post Roth IRA on Roids Improve Your IRA & Retirement Plan Investing). Your money never goes backwards. You’ll be able to take your money out tax free, there is a guaranteed return. I’m going to discuss with you how you are going to fund your Roth IRA on Roids using other people’s money.

I’m going to bring up Roccy DeFrancesco’s book – “Home Equity Management”. The book is very well written. Roccy is a very meticulous guy, I have a lot of respect for him. He wrote this book on how you can reposition your home equity. Let us look at your home equity for a moment. If you are in your home with a 95% mortgage, does your mortgage diminish the value’s home? Of course not, if your home is fully mortgaged it would not diminish the value. But, if you live in an area like California, with mud slides, or Florida with hurricanes and tornadoes and you own 100% of your home (i.e. not mortgaged) then whose problem would it be if your house slides down the hill or it goes under water? It would be your problem. On the other hand, if it’s heavily mortgaged, then it would not be your problem. It’d be an insurance problem and it’d be a mortgage company problem.

So what is the relation of your home equity with your Roth IRA on Roids? If you leverage your home equity and reposition it to fund your Roth IRA on Roids then essentially your money is sitting in your Roth IRA on Roids account and in investment opportunities and it’s safe. Real estate is the only leverageable asset class. Everybody understands that you buy real estate with 5% down, 10% down, depending on how well financed you are. It’s the only leverage that is recommended, people accept, people understand, the banks do it. So by repositioning your home equity in order for you to fund the Roth IRA on Roids, financially you are using other people’s money. And this could also be accomplished with commercial real estate. If you have equity in commercial real estate, refinancing it in order for you to reposition your assets definitely makes a lot of sense. At the end of the day, you still have the same assets. If you have equity in your home or commercial estate, that’s an asset. If you have equity in Roth on Roids, or other investment opportunities, together they are the same number. You’re just repositioning. You are relocating your assets. That’s all you’ve done.

So method number one from Roccy DeFransesco’s book, “Home Equity Management,” describes how to reposition your home equity for tax-free retirement. You can buy the book. I’m not trying to sell it, but it is an extraordinarily, well-documented book.

With a Roth IRA on Roids, you could contribute $5,000, $20,000, $50,000 and $100,000 depending on how much money you have and how much you want to contribute and when you want to begin to withdraw your money.

It is powerful wealth building tool. When I heard about this from Roccy DeFrancesco, I was completely overwhelmed because I spent my lifetime looking for tax-advantaged products that are safe, legal, that you can use, with very little risk. You are not going to get this from your lawyer or your accountant. Your lawyer’s stock-in-trade is “possibly, maybe or I’ll look into it.” And even if he knows he’s not going to tell you because, traditionally, he works both sides of the fence.

Your accountant and lawyer would typically not look to at any type of these products because he could become an IRS target. Whenever there is a criminal investigation, his papers would be the first thing they go after, summonses. I work with accountants and I teach them and this is their usual stance on the matter. I teach lawyers and accountants for credits. They’re generally intimidated. For the price of preparing your income tax return, they’re not going to look at these types of wealth-building tools in the same way that I am trying to present to you and share with you. My wealth-building strategies are completely legal. You don’t have to hide your money, you don’t have to go offshore, you don’t have to provide a lot of documentation, and you don’t have to report your requirements to the feds.

With a Roth IRA on Roids, we need a couple of things. We need your age, how much money you want to put in, and when you want to start withdrawing from your IRA account. Based on that, we can give you your very own chart. Just give us a call at 508-429-0011 or call us toll-free for a free consultation at 1-888-938-5872.