Skyrocketing Tax Rates

Traditional IRAs are great investment tools. They can help an individual plan for retirement. There’s nothing wrong with them, and in fact they can be quite helpful to just about everyone looking to establish a retirement account. Although they have caps as to how much you can deposit into the account each year, the amount you deposit is tax deductible, so whatever amount you deposit transitions into money that you never earned since you don’t pay any taxes on it. This translates into larger initial deposits and a greater base from which your account can earn interest.

Nobody knows what the tax schedule will be in the future, but given the bloated entitlement programs the U.S. currently embraces, it’s likely that taxes will sky rocket. An effective 50% to 75% tax rate is not out of the question. To see the likely path the U.S. will follow, one only has to take a quick look at France where the top income earners pay an exorbitant 75% rate on their income.

To avoid paying potentially high tax rates, a Roth IRA makes terribly good sense because when you finally start making withdrawals, your money will not be affected by the current tax rates. Your money will be 100% yours.

In exchange for having tax-free withdrawals and being immune to future tax hikes, you’ll have to pay taxes up front when you open your Roth IRA.

Although every individual’s situation will be different, it seems like a Roth IRA provides the most protection against skyrocketing tax rates.

The only way to find out whether or not a Roth IRA is the ideal solution for your needs is to speak face-to-face with a licensed agent in your state. Only a licensed agent can provide the answers to the all important questions you’ll need to ask prior to opening an IRA account.