Thursday, February 11, 2016

Two Good Tax Free Retirement Options

You are planning for retirement, but you are concerned about paying taxes to THEIRS(The IRS). You realize that your financial plan may accumulate a large sum of cash, and you need all that cash to last during your Golden Years. What options are there?

Cash Out and Hide Yo Cash Under the mattress 

This is a viable option for the Chicken Little crowd, or the crowd that works in organized crime. If this is you, seek another economic consultant to obtain guidance. Also, THEIRS will attempt to collect....aggressively. 

Roth IRA

This is a good option. The Roth IRA allows one place money in the account post tax. The money grows inside the account Tax free, as the returns compound tax free as well. Later, at retirement, the user can pull the money out tax free! That is correct! No need to pay Uncle Sam additional taxes. Of course, there are some limitations. For example, there are income limitations. If you earn too much money, on an annual basis, the Roth IRA may not be an option for you. Secondly, there is an annual contribution limit. There is an annual cap on contributions into a Roth IRA. Contact me directly to find out if you qualify for a Roth IRA. 

Why is this option tax free at retirement? It is tax free at retirement because of this: During the working years, the client has paid taxes on the contributions into the Roth IRA. When retirement occurs, the client can withdraw the monies tax free. This is a function of the IRS tax code. 

Life Insurance

Yes, you read this correctly: Life Insurance. More specifically, Permanent Life insurance. My personal favorites: Fixed Universal Life, Index Universal Life and Participating Whole Life insurance. All of these contracts can be structured to mimic a Roth IRA. Since the Roth has an income restriction for participation in the program, the Life Insurance option is an excellent option for higher income earners. However, lower income earners can utilize this option as well. Also, with life insurance, the annual contribution "limit" is based upon the size of the policy, or the face amount.

With these three aforementioned life insurance options, the cash value growth, in most cases, have a built in guarantee of a prevention of downside risk. Translation: The Insurance company guarantees a baseline payment regardless of the downside action of the market. This varies from company to company. At retirement, the client can pull the funds out TAX FREE! With this option, it still comes with the death benefit, which can be passed down to the beneficiaries TAX FREE, and bypass probate. 

With some companies, these policies can have riders that will allow for Long Term Care benefits. This is a fantastic option, as many retirees must deal with health challenges as they age. Check with me to see if you can obtain this sort of option in your personal economic plan. 


Seeking a tax free retirement plan is a prudent option in today's economic climate. With the current Presidential campaign heating up, all the candidates are seeking ways to raise taxes and grab more of your hard earned cash dollars. These two methods are nice ways of keeping those pesky hands of the politicians off your retirement dollars. 

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