‘One of the best tax-saving deals ever’ and 3 other ways to earn tax-free income

'One of the best tax-saving deals ever' and 3 other ways to earn tax-free income

There are still ways to earn tax-free income. This is the first of our updated two-part series on the best federal-income-tax-free opportunities for individual taxpayers. Here goes. 

Unlike withdrawals from traditional IRAs, qualified Roth IRA withdrawals are federal-income-tax-free (and usually state-income-tax-free too). What is a qualified withdrawal? It’s one that’s taken after you’ve met both of the following requirements:

1. You’ve had at least one Roth IRA open for over five years.

2. You’ve reached age 59½, are disabled, or deceased. 

After you’ve departed this cruel orb, your heirs can take federal-income-tax-free qualified Roth IRA withdrawals, with proper planning.   

Exemption from required minimum distribution rules 

Unlike with a traditional IRA, the original owner of a Roth account (the person for whom the account is originally set up) is not burdened with the obligation to start taking required minimum distributions (RMDs) after reaching age 72 or face a stiff 50% penalty….

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