5 Simple Steps: Earn an EASY ROTH IRA MILLION!!!
5 Simple Steps: How To Earn An Easy Million Through a ROTH IRA!
by Tom Levine
So, you wanna earn a million dollars, super-duper easy' How would you like the federal government to give you a big, huge tax break' Wouldn't it feel deliciously good to earn a Million Dollars of income, completely tax free' How would you like to earn a million dollars of income passively, quietly, without lifting a finger' Well, put your seatbelts on, folks, because in a brief nutshell, I'm going to introduce you to the financial vehicle that you've been looking for! Welcome to the wonderful world of investing through a ROTH IRA in 5 simple steps:
1. What is a ROTH IRA'
2. Which way should I go'ROTH IRA or Traditional IRA'
3. When Should I start Investing in a ROTH-IRA'
4. How Long Before I Earn $1,000,000 ' One Million Dollars'
5. A Checklist
Before we proceed, A couple things to please keep in mind. A ROTH IRA, while completely simple and easy for all of us to understand, is not without complexity, and each individual is different. Laws change, so always check with your financial advisors before proceeding to take action. The information contained in this journal are solely the opinions of this writer, so be sure to seek out solid financial advice before making any important decisions. Be sure to do your own research and conduct your own financial assessments prior to changing any investments or making any new financial decisions. While I welcome the opportunity to introduce you to the ROTH IRA in my own words, please make sure that you assess your retirement plans on your own, alongside those financial advisors that you trust and rely upon. With that said, let's proceed!
1. What is a ROTH IRA'
a. A ROTH IRA is a wonderful product that came into existence as a result of the Taxpayers Relief Act of 1997. It is a new tax-shelter for the average American, and a new opportunity to take advantage of certain benefits that were previously unavailable.
b. A ROTH IRA, in part, reverses the process from that of a regular traditional IRA account. The down side is that there are no tax deduction benefits for your contributions. The plus side is that the contributions you make, are POST-TAX'In other words, you're not using the ROTH-IRA before taxes are taken out of your paycheck. You're using the ROTH-IRA from your Net proceeds of your paycheck, or after taxes are taken out. Why is this absolutely wonderful' Well, I'll get to that in a minute.
c. Most of us can add up to $3000 (as of 2004) per individual into each account per year. Now of course, if you're married, then you can add up to $6000 per household, combined into two ROTH-IRA accounts, per year! That's enormous. Absorb that for a second. You and your family, can invest $6,000 additional monies, per year, in a tax-shelter, that will earn revenue TAX-FREE!
d. After 5 years, the principal can be distributed, even though the earnings should remain in the account to avoid taxation and penalties. What this means is, that you are not restricted completely from this money. After 5 years, options become available to you. This is nice, because this means that you do not, necessarily, need to wait until retirement, to extract funds, should the need arise. Of course, early withdrawal penalties may exist as they do in many tax-shelters, however, the point is that there is added flexibility in the ROTH-IRA, that was previously unavailable.
2. Which way should I go'ROTH IRA or Traditional IRA'...Perhaps!
a. Now whether to go with a ROTH IRA or a traditional IRA account is really up to you and and your financial advisors. This is a subjective decision, and each persons needs and requirements are different. Here are a couple things that I keep in mind, however, when I'm examining the ROTH-IRA for my family:
b. Do I have a 401k, and a company sponsored Savings or Pension plan, and a Bonus plan, and a variety of other tax-shelters, and retirement programs' If I do, then perhaps I don't necessarily need a traditional IRA account, because I already have investments working to my benefit, pre-tax. Perhaps if I were to sit down and do the math, I would see that all my pre-tax bases are covered. What I need now, is the next step'What I need now, is a way for my family to invest my POST-TAX dollars smartly. What I might need, is a ROTH IRA'Perhaps.
c. Am I planning on extracting the EARNINGS of this fund, before I retire' Now, I'm not talking about the Contributions. This is an important distinction that was previously discussed. I'm talking only about the Earnings. Anyway, if the answer is YES, then I may want to look into a regular, typical, standard brokerage account, and forget IRAs altogether. Remember, both the ROTH-IRA and the Standard IRA are designed as tax-shelters that the average American family can use to grow their assets for retirement purposes. If my assets are much larger and robust, then perhaps a ROTH IRA may be small potatoes, too restrictive, and I should just go with a standard taxable account for much greater flexibility'Perhaps.
d. Do I have very few company-sponsored retirement choices' Do my earnings place me in a higher-tax bracket, and thus, I might need to seek out the benefits of a tax-deduction' Do I already have a traditional IRA, and thus, I may need to consider whether or not a 'conversion' to the ROTH-IRA is a benefit or a penalty' Is the Traditional IRA a better choice for me' Perhaps.
e. And of course, there are so many other questions that go into this important decision. However, perhaps the above points will help you get a feel, a direction, an overall understanding, of which choice may be better for you. Personally, I think the ROTH IRA offers the most compelling benefits to the most people. It certainly does for me and my family. So, as you journey forward in examining these two tax-shelter accounts, make sure to ask the important questions, as the ones I've suggested above.
3. When Should I start Investing in a ROTH-IRA'
a. The ROTH-IRA is a fabulous 'next step' on you journey to cleaning up your financial house, and moving from the reactive you, to the wealth-building active you. Don't start with a ROTH-IRA. Think of it as the icing on the cake.
b. Your first steps should always be ......
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