Stealth Taxes and Stealth Insurance Premiums can rob tens of thousands of dollars from unwary retirees.

 

Conventional wisdom would have you believe that choosing the Roth during one’s working years is all about present and estimated future income tax rates.

 

We may be told to choose the Roth if future taxable income in retirement increases (unlikely for most) and to choose the deductible Traditional IRA if taxable income is expected to fall in retirement.

 

Nothing could be farther from the truth for many taxpayers. Roth IRA or Designated Roth Account distributions can not only avoid income tax on the distribution itself, but can also

 

  • Slash income taxes on Social Security benefits
  • Reduce the Net Investment Income Tax
  • Cut Medicare Part B and Part D insurance premiums
  • Preserve income tax credits, itemized deductions, and dependency exemptions

 

Lest you think the author has forgotten to take his meds with these “wild” claims, consider that each of the items on this list are driven, at least partially, by adjusted gross income. Roth distributions result in lower adjusted gross income compared to traditional IRA, qualified plan, and annuity distributions.

 

Conventional wisdom may not be totally incorrect, but may be woefully superficial!

 

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