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Although Trump’s Tax Reform cut taxes in many ways, millions of Americans will see taxes increase in 2018.  The lower standardized deduction and the $10K cap on deductions for SALT (State and Local Taxes) will primarily affect those in the upper-middle to mid-upper class.   Consequently, tax planning is becoming a growing priority for an increasing population.  But for one of the most common tax-minimizing tactics, the Roth IRA, the luster is wearing thin as its limitations are becoming increasingly apparent.  In its place, the Rich Person Roth is taking center stage as a strategic tool to reduce current and future income taxes, as articulated by David Rae, in the Forbes article, Rich Person Roth: For The Most Tax-Free Retirement Income.

This article discusses how the Rich Person Roth beats a basic Roth IRA and how it overcomes the biggest risks to your financial security.  Then it opens a candid dialogue about why it isn’t for everyone.

In addition to discussing the points of this article, we’ll help you think through how best to reduce income taxes and create a future of time and money freedom.

Table of contentsWhere Privatized Banking Fits into Your Cash Flow SystemWhy Future Tax-Free Income Is in High DemandTax-DeferredTaxableTax-Free, or Tax-ExemptWhy the Roth IRA Falls Short1) Loss of Control with Limited Access2) Low Contribution LimitsAccumulation Insufficient to Support Future Desired Lifestyle3) Many Earn Too Much to Contribute at AllA Better Alternative for Tax Planning: The Rich Person RothWhat Is a Rich Person Roth?The Rich Person Roth Works Great for Women, TooThe Benefits of Using Cash Value During RetirementControlUse More of Your Money and Still Leave a LegacyEnjoy Your Money MoreReduce Future Taxable IncomeOptions for Turning Life Insurance Cash Value into an Income StreamThe Drawbacks to Using a Rich Person Roth and How to Overcome ThemA Better Alternative for Tax PlanningBook a Call to Find Out How a Rich Person Roth Could Work or You

Where Privatized Banking Fits into Your Cash Flow System

Life insurance loans are a part of Privatized Banking, just one step in the greater Cash Flow System.

Wedged between Stage 1 and 3, Privatized Banking fits into Stage 2, the canopy of protection in your financial life.  While protecting your personal economy from the risk of loss, it also helps you keep more of the money you make and amplifies your cash-flowing asset strategy, accelerating time and money freedom. 

Why Future Tax-Free Income Is in High Demand

While tax law changes have everyone on high alert, grappling for how exactly they will be affected today, the discerning are already calculating future impacts.

To widen our view of how to handle current and future taxes, let’s talk about the three ways money set aside for the future can be taxed.

Tax-Deferred

One strategy is to find financial tools that defer a tax.  Here, the investment is made pre-tax, lowering taxable income in the year the contribution is made.

However, income taken from these accounts later is taxed at whatever future tax rates will be at that time.  Familiar accounts in this category are 401k’s, 403b’s, IRAs.

While suppressing and placing a bandage on an immediate concern, tax-deferred assets create more uncertainty for the future.  What will tax rates be at that time? How will I be impacted?  How much money will I have, how much tax will I owe, and what will be left?

Taxable

Another type of financial tool is a taxable asset.  With a taxable account, you put in dollars that have already been taxed.  As your money grows, the growth is taxable income.

Accounts like checking, savings, money markets, and securities fall in this category.

The growth is taxable each year.  In the early years, growth is small, and the taxes are fairly insignificant.

But as these accounts grow over time, the taxes due can become hefty.