Category: Protecting

Roth IRA: A powerful vehicle to accumulate significant wealth

Most people are aware that Roth IRAs enable after-tax contributions to grow income tax-deferred. Moreover, provided that certain conditions are met, distributions of not only contributions—but also investment growth—of a Roth IRA can be taken income-free provided that you’ve owned the IRA for at least 5 years. The five-year period begins on Jan. 1 of the year you made your first contribution to your Roth. Once that 5-year period tolls, earnings can only be withdrawn income tax-free if taken after age 59½ unless you qualify for certain exceptions. To be clear, however, if you’ve had your Roth for less than five years, there are also exceptions that can exonerate you from the 10% penalty on withdrawn earnings — but not all income taxes (see below for more detail).

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THE PUERTO RICAN MIRACLE: PAY ALMOST NO BUSINESS OR PERSONAL INCOME TAX LEGALLY!

“Of course, it must be too good to be true!” “My accountant said it is illegal and will increase my audit risk and I may go to jail!” “If it existed everyone would know about it!” I have heard every variation of reasons not to fully realize the benefits available in the Internal Revenue Code. However, my 37 years of taxation experience allows me to understand that no one, not myself, not your CPA, and not even your tax attorney knows everything.

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