The Seed and the Harvest

If you gave a farmer a choice to pay taxes on his seed or on his harvest, what would you recommend he do? No doubt, you would recommend that he pay taxes on the much smaller amount of seed and receive the entire harvest tax free! The option between a Roth IRA and a traditional IRA are the same. A Roth IRA allows you to pay income taxes on the amount that you invest and allows the savings to grow tax free and it allows tax free withdrawals in retirement (age 59 ½)!

Dave Ramsey has called the Roth IRA the most tax friendly investment savings tool allowed by the IRS today! For 2010 only, you are allowed to convert traditional IRA savings to Roth IRA regardless of your income level! The 10% penalty would be waived. Taxes for the converted IRA savings can be paid 50% in the 2011 and 50% in the 2012 tax years.

Should you convert your savings? Contact your tax professional and discuss your options very soon. This opportunity will be over at the end of 2010. The individuals best suited for this opportunity will be those not needing to withdraw the money for at least 10yrs, will likely be in a higher tax bracket by the time they retire and have cash on hand to pay the income taxes for the conversion.

Call if you have questions. Time is running out.

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