Phil Cannella is all too familiar with a common saying that most people have heard before “there are two things certain in life, death and taxes.” Although this is true and no one can live forever, there are ways to help reduce taxes to the American Retiree and Phil Cannella wants to share that secret.
The IRS has something called a Roth IRA which is essentially an after-tax IRA. A Traditional IRA is all pre-tax dollar contributions that at some point must be taxed in a person’s life-time and those funds are fully taxable to the person who inherits the funds. The Roth IRA allows the account owner to pay the taxes in a lump-sum and never have to owe a single penny in taxes on those funds nor the earnings again, not only during the owner’s lifetime, but during their children’s and grandchildren’s lifetimes as well. This means that the account owner is now immune to any tax increases in the future and is not required to take Required Minimum Distributions (RMDs) beginning at the age of 70½. Phil Cannella is able to demonstrate the power of the Roth IRA but stresses that the rule only makes sense to certain people. There are many considerations to be taken into account before a conversion is recommended and Phil Cannella once again is utilizing another IRS rule in order to reduce the taxable income during one’s retirement.