Richard Geller, CEO and managing director of FinancialSuccess Institute.org, announced today, “The institute is undertaking a new study to inform our subscribers and others that are interest about the details involved with a self directed Roth IRA. The self directed Roth IRA really is a different beast compared to traditional retirement plans that defer taxes until distributions begin when plan owners retire. The most notable difference pertaining to the self directed Roth IRA is taxes are paid in the year that contributions are made to the self directed Roth IRA.”

FinancialSuccessInstitute.org is dedicated to providing subscribers with all aspects of information and resources regarding their retirement savings. Previously the Institute exposed a potential major fault with the self directed Roth IRA. Information about the risk of self directed Roth IRA accounts being confiscated by the government is covered in this self directed Roth IRA article.

Geller goes on to say, “At first blush the fact taxes aren’t deferred with a self directed Roth IRA appears to make it inferior to tax deferred retirement accounts. That’s true for most individuals. However, some people benefit from the fact that earnings in a self directed Roth IRA are not taxed when distributed during retirement.”

Geller continues, “One scenario favoring the self directed Roth IRA is when an individual expects to be in a higher tax bracket after retirement than during their working years. The self directed Roth IRA may be advantageous to young married professionals making combined starting salaries of less than $ 70,700 in 2012 when the income tax rate is 15%. As their salary grows, they’ll probably want to change to another retirement vehicle because the lack of a tax deferral with the self directed Roth IRA becomes a disadvantage in higher tax brackets. But let’s say at retirement these professionals have a total of $ 3 million in the self directed Roth IRA and another taxed deferred account. They might be drawing a retirement income of $ 120,000 annually. At today’s tax rates, they would pay 25% income tax on the tax deferred account. However, the self directed Roth IRA contributions and earning are withdrawn completely tax free.”

Geller adds, “Using the self directed Roth IRA early in a career can be a great way of creating wealth. Let’s say the self directed Roth IRA has $ 50,000 by age 30. If the self directed Roth IRA compounds annually at 12%, the after tax self directed Roth IRA will grow to more than $ 2.5 million by age 65. All of the earnings in the self directed Roth IRA are tax free.”

Geller concludes, “Still, the self directed Roth IRA has draw backs and is one of the riskier retirement accounts. Especially, when it comes to the possibility the government can change the tax code to make the earnings taxable in future years. The Institute’s self directed Roth IRA study will go into the details of both the of the advantages and disadvantages of the self directed Roth IRA as well as the risks associated with a self directed Roth IRA. People will find the results of the self directed Roth IRA study at FinancialSuccessInstitute.org.

Disclaimer: Information here and at FinancialSuccessInstitute.org is not legal or professional advice regarding the self directed Roth IRA or any other retirement account. It’s intended only as general information sharing. Seek professional assistance regarding your specific circumstances and applicable laws to assure you follow all of the self directed Roth IRA rules or before taking any other retirement account action.

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In the interest of encouraging workers to save for retirement, Congress has authorized several kinds of retirement savings plans that qualify for reduced or deferred income taxes. These plans provide a financial incentive for people to save, either by allowing workers and employers to deduct from income the amount they contribute to the plan or to take tax-free distributions from the plan after they retire. This CRS report summarizes the provisions of law that govern the taxes applicable to pre-

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