Young people who lived through the Great Recession experienced the most frightening financial crisis since the Great Depression. According to a recent article by cnnmoney.com that cited a survey by Capital One ShareBuilder, 60 percent of millennials in their 20s and 30s distrust the stock market. With a Roth IRA LLC, bold young people are taking charge of their financial destiny. Older people who started investing in a Roth IRA when lawmakers introduced it in 1997 also like the control they have with a Roth IRA LLC. While a self-directed IRA is a step in the right direction, it puts your retirement income in a trust controlled by a third-party custodian. You can tell the custodian how to invest. With the IRA LLC, you get to make investments without going through the custodian. Having checkbook control with Roth IRA LLC set-ups appeal to the millennial and Generation X generations that are express their independent and free-spirited.
Understand the history of the Roth
Before choosing to set up a Roth IRA LCC, it’s important to understand the history of the Roth and some of its advantages. A Roth is a retirement savings vehicle with key advantages for people who think they will be in a higher tax bracket when they retire. According to an article by forbes.com, the Roth IRA was part of the Taxpayer Relief Act of 1997. Named for Sen. William Roth (D-DE), the Roth IRAbecame a new retirement account that permitted people with earned income to make contributions out of after-tax money. When you contribute to a Roth IRA through they years, you don’t get immediate tax benefits by lowering your taxable income. If you want to loweryour taxable income, opt for a traditional IRA. Instead, you essentially delay your gratification until you are older. While people with a traditional IRA have to take minimum required distributi ons and pay income taxes on the money, you can take out money from a Roth tax-free.
Roll your money into a self-directed account
Whether you have a small balance or a large balance, you can roll your money from a Roth IRA into a self-directed IRA or Roth IRA LLC. When you form a LLC, you name yourself as the manager and the IRA as the sole owner. The LLC uses the money in your IRA, which gives you checkbook control of the IRA. Having checkbook control comes in handy if you want to buy a real estate investment with cash. You can also buy a variety of alternative investments for your IRA. When you retire, you won’t owe taxes on the gains even if youraccount balance grows from $10,000 to $10 million. Alternative investments appeal to many people who are skeptical about the stock market. According to CNN Money, 93 percent of millennials feel less confident about investing because of their lack of investment knowledge and distrust of the markets. With a self-directed IRA, you can invest in something that’s tangible or something you understand and can relate to.
Many experts claim people will face a retirement crisis if they don’t save and invest successfully. Smaller nest eggs mean retiring later or working long past the full retirement age. Experts warn against being too conservative by staying with cash. To avert a retirement crisis, consider a Roth IRA LLC. You can invest in less traditional areas but make all of your own investment decisions. You just have to use caution not to make prohibited transactions or risk losing your IRA tax exemption status.
At New Standard IRA, we help people who want to rethink retirement planning. We help our clients set up Roth IRA LLC and other self-directed IRAs. You should enjoy all freedoms allowed under IRA law. For more information about setting up a Roth IRA LLC, please contact us.