A comfortable retirement is a goal we all want to strive for. When we reach our golden years, the last thing anyone wants to worry about is whether or not they have enough money saved away. After working and paying taxes for so long, the allure of a tax-free livelihood is more than a little enticing.

As you reach retirement age, there may be a way to enjoy your well-earned time without struggling under the income tax burden. So, how can you grow your retirement fund and stop paying taxes?

Consider opening a self-directed IRA fund. An SDIRA is an excellent way to prepare your nest egg and is not without some beneficial tax breaks. Here are some ways opening an SDIRA can help you pay little to no taxes upon retirement.


Self-Directed Traditional IRA


The benefit of opening a traditional SDIRA is the up-front tax-break. Traditional IRA contributions grow tax-deferred until you reach retirement and may be tax deductible. As you build up funds in your IRA, your nest egg will have better overall growth. As you reach retirement age, you will still face taxation when you withdraw funds; however, by that time, you may not have any taxable income.

For example, Social Security funds aren’t taxable – and if you have a low source of income, your income tax bracket can have you paying very little on your withdrawals. While this method still involves taxes, you can avoid a big hit and enjoy your savings without losing too much. If you want to avoid paying on withdrawals completely, the Roth IRA may be the right choice for you.


Self-Directed Roth IRA


Opening a self-directed Roth IRA is an excellent for those who want to start off saving small or wish to avoid paying taxes when they retire. Account holders pay taxes on their contributions up-front.

The Roth IRA still has steady, long-term growth and there is no need to pay federal income taxes on your withdrawals after you reach retirement age. Additionally, Roth IRAs can help account holders before they reach retirement; in certain situations, funds can be withdrawn tax-free before retirement!

First-time home buyers can draw up to $10,000 max to help purchase their home. Money can be withdrawn for educational and medical expenses. Finally, in the case of disability or sudden unemployment, account holders can withdraw funds tax-free.

To benefit from your Roth IRA, however, the funds must be in the account for five-plus years to avoid the taxation regardless of the situation. It’s a good idea to put as much into your Roth IRA as possible; there’s no telling what may life events may occur.


Consult with Horizon Trust

Hitting Retirement Age


When it comes to retirement, timing is everything. As soon as you reach age 59 ½, you can begin to withdraw funds without penalty. As stated previously, you will not have to pay taxes on your Roth IRA withdrawals. If you have a traditional IRA, you will have to pay a small federal income tax based on your tax bracket.

A good strategy is to invest in both IRAs; spend with the Roth, save with the traditional IRA. This will help you get the most out of your earned income. Be sure to research the terms of use and privacy policy involving both IRAs before making your decision.

Additionally, when investing in an SDIRA you don’t want to end up paying more taxes. Avoid any transactions that can result in unwanted penalties: UBTI or UDFI. Perform your due diligence and make sure that you are following all self-directed IRA rules set up by the Internal Revenue Service (IRS). For a healthy retirement, make as many contributions as possible to grow your fund for your family and future.


Enjoying Your Golden Years


Planning for your retirement doesn’t have to be a process. Ask yourself what you envision for your future, and set to work on making it happen.

Don’t just rely solely on Social Security or government funding; take control of your own retirement. With the proper investments and the right IRA, you can look forward to your golden years. If you want to avoid paying taxes, fees, and enjoy your earned income, be sure you put in the research to avoid all of these pitfalls.

If needed, consult the advice of a Horizon Trust financial advisor and find a method that works for you and your family. Build your nest egg today with the help of a self-directed IRA.