A recent Kiplinger’s article, titled “Why You Should Open a Roth IRA” makes the case for understanding this savvy retirement tool.
Essentially, the Roth IRA is the inverse of the regular, plain-vanilla IRA. The latter is all about taxation, which are deferred until the time you take distributions voluntarily or involuntarily, such as when you are required to take “Required Minimum Distributions” (RMDs).
Conversely, with Roth IRAs you pay the taxes upfront, but then the funds grow without taxation thereafter. In fact, after this upfront taxation on the initial investment, no income taxes will be owed thereafter.
Roth IRAs offer a very specific benefit when it comes to estate planning in Overland Park or elsewhere. Clearly, eliminating those pesky RMDs and future income taxation altogether can help you preserve assets for yourself now and your heirs later.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: Kiplinger (September edition, 2013) “Why You Should Open a Roth IRA”