A Publication of WTVP

What if I told you that you could save money in an account that would grow tax-free, and when you die, you can pass the account to your children or grandchildren, who would not pay income taxes on it? What if you could put money into an account and potentially take out the principal any time you want—with no penalty or tax? Would this interest you, or does it sound too good to be true?

It turns out this is exactly what you can do with a Roth IRA. There are a few simple rules to follow, and if you think you make too much to contribute to a Roth IRA, keep reading for an easy, effective way to help you achieve this goal. Let’s explore this great estate and tax planning tool.

If you are married with an adjusted gross income of no more than $194,000—or $132,000 if filing single—you can contribute directly to a Roth IRA in 2016. You can also contribute to a Roth IRA even if you have a 401(k) at work! It is that simple.

For those with salaries exceeding these thresholds, there is still hope. Here are the steps to follow:

This would result in a fully funded Roth account with little or no tax consequences. If you currently have an IRA, you should check with a tax advisor, as there may be tax consequences to this strategy. Some of the other rules surrounding the Roth IRA include:

Sometimes, the government does give us options that seem too good to be true. Take advantage of this great tool to help grow wealth and pass assets to your next generation. iBi

Daryl Dagit is the market manager and financial advisor in the Peoria office of Savant Capital Management. He can be reached at (309) 693-0300.