Many people make the common mistake of accumulating most of their investments for retirement in pre-tax (tax-deductible) IRA and other retirement plan accounts, only to create a tax nightmare when the taxable Required Minimum Distributions (RMDs) are required to begin. Some major reasons for this costly oversight are some people are only focused on saving taxes TODAY and lose sight of the bigger, long-term picture, and may not fully understand the real value of Roth accounts and how they work.
In 1789, Benjamin Franklin wrote, “Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes.”1 Death is still certain, but for the wise investors who understand Roth accounts and how to fund them, taxes can be eliminated if the rules are followed.
rvest wisely.