Investing Articles

The Roth IRA rules allow us to accumulate tax-free wealth. It’s a plain and simple fact. Following the definition of a Roth IRA we are allowed to contribute $5000 per year. That figure goes up by $500 each year, beginning in 2009, to help us keep up with inflation. We pay regular income taxes on that amount each year, but our qualified distributions, which can begin at age 59 ½ are tax-free.

Under the Roth IRA rules, earnings with in the account are tax free, as well. Of course, that’s true of a traditional account, but do you really want to pay taxes after you retire? I don’t.

Senator William Roth of Delaware wrote the definition of a Roth IRA in 1996. In that 12 year time span, investors that made the maximum contribution each year have deposited a total of $34,000. Their account balance depends on what they chose to invest in and the annual rate of return on the investment.

Self-directed accounts that did not rely heavily on the stock market have had the highest earnings over the years. Of course, those account holders did not stick with the low paying CDs, either. Under the definition of a Roth IRA you can do so much more.

You can invest in residential and commercial real estate, tax liens and other vehicles. Those that wanted to build their balances quickly have done just that. There are no Roth IRA rules concerning maximum earnings from within the account. There are many success stories. Here’s one.

Robert averages a 15-20% return on tax liens. In one case, he was able to purchase a tax lien on a house for $540. You buy these liens from the county. You make an effort to collect from the owners. If they fail to pay, you own the property. No one paid the lien, so Robert’s account now owns a house worth at least $45,000.

Of course, now Robert has to work to find a buyer and the whole thing can be pretty time consuming. But, when compared to CD earnings that average 3% and the ups and downs of the stock market, it seemed like a better choice to Robert. Because of the definition of a Roth IRA experienced investors are using their accounts for their most profitable investments. In that way they avoid capital gains taxes, which are currently 15%.

Learning the Roth IRA rules is an important first step. If you’re an inexperienced investor, the next step is to learn more about the real-estate-market. The definition of a Roth IRA is simple, it’s an account allowed under the tax law of the United States. Earning big money within the account is not so simple. You have to make the right choices today or you won’t be able to retire in 20 years. That’s a fact. The Roth IRA rules are written in Public Law 105-34.

But, I’d advise that you spend your time reading about real-estate-investing, if you want to retire in comfort. Considering today’s economic environment, selecting IRA real estate turnkey solutions can be the best investment strategy for building your retirement wealth.

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