Why You Should Do A Roth (Part 5)

Do you know how Social Security benefits are taxed? State income taxes? How Medicare premiums are calculated? Ever heard of NIIT? What your RMDs (Required Minimum Distributions) will do to your tax bracket? How about other lump sum distributions? What kind of taxes will your surviving spouse pay? How about the taxes you pass on to your kids?

All of the above will be affected by distributions from your tax-deferred retirement accounts. In this book I’ll share with you example after example of how your tax-deferred accounts can greatly increase your overall taxes and even Medicare premiums. The numbers, once they’re laid out for you to see, simply cannot be refuted.

In this book, you will see how the Roth is the most powerful financial planning tool ever created to increase your family’s wealth. Unfortunately, most people do not understand the significant benefits of the Roth. They see it only as a pay-tax-now vs. pay-tax-later option. The typical analysis as to whether or not one should do a Roth goes something like this:

“I expect my tax bracket to be lower in the future, so it doesn’t make sense to do the Roth. Why pay a higher tax rate today to avoid paying tax at a lower rate tomorrow?”

Makes sense, right?


I’ve seen what happens to clients when IRA distributions account for a larger portion of their income in retirement. Taxes grow and Medicare premiums increase, leaving retirees with less net income even though they have more gross income! Widows, in particular, can find themselves in a very bad financial position with limited options. The Roth, when understood and used correctly, can eliminate much of these higher taxes and premium increases.

Now, in fairness, I’ll share four reasons how the Roth can’t help you any more than a tax-deferred account can. Not that these four reasons should dissuade you from going full-throttle with the Roth. But I feel it’s important to show how the Roth can improve one’s financial life and how it can not.

My hope is that after you read this you’ll have a much deeper appreciation of the how Roth IRA can enhance your family’s wealth–tax-free–for generations. And that you will take advantage of it.

In the last of the 5 part series, we show you what happens when you defer your contributions to your Roth 401k as opposed to the traditional side.

HUGE differences in taxes. Huge difference in Medicare premiums.

HUGE savings in taxes to the surviving spouse…and the kids too!

Yes, Bob and Jane will pay a bit more taxes today. There is no escaping that fact, my friends.

When you add money to a Roth, you are NOT getting a tax benefit today. Thus you will pay more in tax today.

But to calculate if this is worth it or not, you need to look well beyond just your tax bracket today vs. what you think your tax bracket will be in the future.

You need to consider the taxes on Social Security, the extra premiums on Medicare, the increase taxes on long term capital gains and qualified dividends, and you need to consider the same for your surviving spouse who will have a much higher tax bracket than you even if she/he will have less income due to nothing more than being a single taxpayer!

So watch as we run through the numbers for a Roth and compare them to the Traditional.

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