Estate Planning With Iras – 4 Hot Tips And Tax Strategies To Boost Returns
Tip #1-Tax Advantages Of A Roth
When it comes to estate planning with IRAs, you may want to consider the tax advantages of the Roth account. While traditional accounts provide you with a tax-break today, Roth accounts provide you with a future tax-break.
Although you pay regular income taxes on contributions that you make during the year. Withdrawals are non-taxable. None of the earnings made within the account, including interest on other returns, are ever taxed. Basically, you are creating tax-free wealth for your retirement.
Tip #2 - Think Outside The Box
Smart real estate investors have been taking advantage of this tax shelter for quite some time. What? You didn’t know that you could use your retirement account to make real estate investments?
Well, it’s not that surprising. The conventional advice that you get about estate planning with IRAs comes from bankers and brokers. They focus on the earnings generated with money markets, certificates of deposit, stocks, bonds and mutual funds. But, you actually have more choices than that.
You can buy houses, hold mortgage notes, resell property, or hold it for rental income…practically any type of property investment, along with other less traditional choices is allowed under the current tax laws. The only that that you need to get started is a good self-directed custodian and some sound advise.
Tip #3 - The Unwritten Rule
There is an unwritten rule, of sorts, when it comes to investments made from within a retirement account. Always use it for your most profitable investments.
Let’s say that you buy houses and resell them for a profit. You haven’t gotten the best advice about estate planning with IRAs, so you use personal funds to complete the deals. One year, your profit from a sell is $50,000. You’ll only get to keep about half of that.
You will pay capital gains, probably state taxes and maybe local taxes, too. All of that adds up.
If your retirement account earns that profit, there are no capital gains or state taxes. If you have a Roth account, you’ll keep all of that money and it will continue to earn compounding interest. Even if you stick with a traditional account, you are likely to be in a lower tax bracket when you retire. So, you’ll still end up keeping more of your money.
That’s why you use these tax-sheltered accounts for your most profitable investments. If you want to buy CDs, use your personal funds for that. Full diversification is the key to estate planning with IRAs, if you want to retire wealthy.
There are some new options for “hands-off” real estate investing. These options allow you to reduce your risk, come with guaranteed rental returns and they allow you to help struggling families and communities.
Tip #4 - Get Educated
Sure, you can listen to the quick-flip gurus or attend a Robert Allen seminar. The more information you have the better your chances, but just remember to thoroughly investigate all of your options.
The difference it will make in estate planning with IRAs could add up to millions of dollars. Your earning potential is truly unlimited, if you make the right choices.
Visit www.RealEstateIraInvestor.com
to find out more on Estate planning with IRAs
and about a safe, smart, real estate program that will allow you to retire sooner rather than later.
Jefferson Davis is an expert author in the Solo IRA field.
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