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Benefits of a Roth IRA

We’ve all heard about Roth Individual Retirement Account (IRA) retirement plans. The difference with a Roth IRA retirement plan is that the tax break is given at the time of withdrawal during retirement, whereas the others are disperse the tax break as funds are placed into the account.

Roth IRA retirement plans have several variables to think about and consider, understanding how they work can be intimidating. The best proven plan over time is to maximize the Roth IRA contributions in tax free and tax deferred accounts; creating additional sources of retirement income.

A self directed Roth IRA may be the perfect solution. Depending on the self directed Roth IRA chosen. Each has a custodian who can offer standard asset types such as stocks, bonds, and mutual funds for selection. There are other types of investments available.

Self Directed IRA Limited Liability Company (LLC)

There are some investors who have mastered the ability to manage a self directed Roth IRA and choose to employee a LLC company structure. The LLC allows the owner to execute transactions without the custodian’s involvement, savings fees, paperwork and processing delays. Tax benefits allow the profits from the LLC to pass through the self directed IRA LLC. This self directed IRA LLC is also known as “checkbook control” because the self directed IRA LLC owner is the sole signature authority for transactions and money accounts.

Self Directed IRA

If you appreciate being involved in the management of your plans, the self directed IRA requires the owner to make decisions. Don’t worry, you are not on your own, as the IRS requires that a qualified trustee or custodian maintain the asset on your behalf. Here’s the next best reason for having a professional custodian, they process the administrative tasks, do the IRS reporting, and keep you updated on rules and regulations.

Tax free retirement funds

We still need to reduce taxes and still find a method of earning an income. The best method is investing where taxes are deferred until the funds are withdrawn. Another method that offers tax free earnings are mutual funds that invest in bond of state and local government. These funds are investment for projects like schools, public hospital and water districts. Investing in municipal bond funds do yield less than taxable bonds, however, the income earned on these funds are exempt from federal income taxes.

As in all financial endeavors, it is highly recommended to engage a professional.

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Posted in Self-Directed IRA

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