As we start to think of tax season, I know that most of us think of what we

can use for a deductions for the previous years income. While that is a good

thing to do, we must look at taxes as not just something connected to the recent

year, but as an overall investment strategy. And there is no better strategy in

this regard than a Roth IRA.



Now the requirements for investment in a Roth IRA are these:

• If you are single with an Adjusted gross Income of less than $95,000, you qualify.


• If you are married and are filing a joint return with a combined income of
  
  less than $150,000 you also qualify.
  
  These figures are in reference to the years 2005 and 2006.

If you qualify for this financial vehicle, I would strongly urge you to

invest the yearly maximum of $4,000 dollars. If you are over the age of 50, you

can go up to $4,500 in the year 2005, and in 2006 you can go up to $5,000.

There is basically no better tax investment available than this.

Now what makes this such a good investment? First of realize that the

strength of the Roth isn't in immediate tax relief, its benefits are far better

than that.


For example, you don't pay any taxes on the withdrawals you make from

the account. In contrast with other retirement instruments, such as regular

IRAs, 401(k), and 403(b), you are required to pay taxes on if you withdraw any

of the funds from them. And any other type of retirement account you are hit

with a 10 percent penalty for withdrawals before the age of 59 1/2.

What is so great about the Roth is that there can be a withdrawal of what you

contribute an any time no matter how old you are without incurring a penalty or

a tax. The only thing that has to be watched is that the money you can access is

the money you yourself have contributed. You must hold off accessing you gains

until you have held it for 5 years and reach the age of 59 1/2. If you don't

then you will be slapped with a penalty.



The great kicker to all of this is that when you fulfill the requirements and

begin to pull out the money, you will never have to pay taxes on it of any kind,

whether its capital gains or income tax.

One of the other benefits offered by the Roth is that there is no rule that

makes you begin to withdraw your money because you reach the age of 70 1/2. If

you have owned the Roth for over 5 years, and you pass away, your heirs can take

it over and withdraw funds without having to pay any tax either.

This is one investment we all need to make every year, nothing can beat it.