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Pay Taxes Now (Roth IRA) or Pay Taxes Later (Traditional IRA)

If you were to ask your accountant, “What are the Roth IRA rules; Which is better, pay the taxes now, or pay the taxes later?” he’s going to tell you later. Accelerate the expenses, reduce the income coming in. Well, he’s not going to be wrong, but we are in the lowest possible tax rates in history of the United States. Sometimes it makes better sense to pay the taxes now. The quickest way is to answer this question: Which is better, to pay the taxes when you buy the apple tree, like with a Roth IRA, or when you pick the fruit, like with a traditional IRA? If you pay the taxes when you buy the apple tree, it’s going to be less than when you pick the fruit because you can nurture that apple tree to produce significant amounts of fruits, and every time you pick the fruit, it’s going to be tax free just as with a Roth IRA. So, your accountant is not wrong by saying defer, but sometimes it is significantly better to pay the taxes when you do buy the apple tree because the production of those apples is going to be significantly more. Thus, you are going to be saving a tremendous amount of taxes.

If you ask your lawyer, his stock in trade is always going to be “it depends, possibly, maybe.” The fact of the matter is that either he doesn’t know, or if he knows, he’s not going to tell you what’s better 401k or Roth IRA, or maybe he doesn’t know that he doesn’t know that these types of programs are available or what the Roth IRA contribution limits are. The accountant is not going to take his time to come up with these types of suggestions to you, because for the price of preparing an income tax return, he’s not going to do it. Your lawyer works both sides of the fence, and unless he can figure a way to make a fee, he is very unlikely to give you the answer as well.

I’m Rocco Beatrice, 508-429-0011. Call me with your particular situation and I will be happy to discuss it with you. If I can’t solve your problem, maybe there is no solution.

Thank you.

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