The Roth IRA conversion is the paramount topic in retirement planning these days. You can take advantage of recent changes to Roth IRA rules to save a bundle on taxes. 

Is there a “Tax Time Bomb” ticking away in all our futures? This question reminds me of an old Fram oil filter commercial when I was in school. It read along the lines of “you can pay me now or you can pay me later” - the choice is yours. The same can be said today about the tax situation in our country. In the automotive industry, if you invested a few bucks today, you could avoid total engine failure tomorrow or so they wanted you to think. In today’s tax environment, the government encourages you to put more and more money into traditional retirement plans. 

Does that make the most sense?

Think about it. 

From the Bush administration, we were left with a marginal tax bracket with a maximum federal tax rate of 35.6%. Since then, the federal government has created tax after tax after tax to generate more revenues to pay for a host of huge expenditures. The next step is to increase the marginal tax bracketology. If your tax rate is that of the average American, your federal rate is 28% (for your household). If government raises your bracket to only 35%, the average American thinks they are paying a 7% increase when the real effects are 25%. Let’s put that in dollars and cents:

$100,000 household income @ 28% = $28,000 in taxes or $72,000 in net income

$100,000 household income @ 35% = $35,000 in taxes or $65,000 in net income

That’s a huge difference! The $7,000 in additional taxes is a quarter of what you were paying before, which makes the real money payment massive.

What if they raise your rate to 45% or 50%, or more? This may sound impossible, but the bill is coming due on the national debt and there will be no choice but to slash spending and crank up tax rates.

What if you buy into government’s theory and save lots of retirement dollars? You put away $100,000 and because of your good fortune it grows to $500,000. What then? You pay massive taxes on distributions, that’s what!

Let’s take another look at the theory here from the perspective of “you can pay me now, or you can pay me later.” The current tax rates we have are not low, but they aren’t bad. Future tax rates are going to go through the roof. What if you had the choice to pay taxes on your retirement at today’s rates or future higher rates? You would take today’s rates in a second, right? 

Now you can. The key is to take advantage of the Roth IRA conversion option for 2010. You can convert your current retirement savings into a Roth IRA and pay tax at today’s rates. You can then grow your money and take it out tax free when you retire. By doing so, you take advantage of today’s “low” tax rates and avoid getting slaughtered down the road when tax rates are so high you can hardly believe it. 

Contact us today (800) 341-5433 to take advantage of the Roth IRA conversion opportunity before time runs out. We have many unique strategies that will help you take advantage of the lesser known benefits of being in a Roth IRA that can generate huge gains.