Laura Beck
Feb 16, 2025
“Ideally, you would want to invest in a Roth IRA when you are in a lower tax bracket. Once your salary grows, deferring taxes into a traditional 401(K) or IRA becomes a better tax strategy option,” DeLuca explained.
In an article discussing how the ultra-wealthy build wealth through strategic financial tools, financial expert Anthony DeLuca from RetireGuide highlights several key strategies, particularly with Roth IRAs:
Maxing Out Contributions Early: The wealthy understand the importance of timing when it comes to Roth contributions. While this point was made by Arron Bennett, DeLuca also contributed to the broader concept of disciplined investing: "The ‘average person’ can do exactly what the 1% does. It’s about investing and staying disciplined.”
Using the ‘Backdoor’ Roth IRA Strategy: DeLuca explained how the wealthy bypass income limits to contribute to Roth IRAs. He said, “Even individuals whose salaries actually exceed the Roth IRA contribution limits can contribute with a ‘Backdoor Roth.' This involves contributing non-deductible money into a traditional IRA and then converting these funds into the Roth.”
Investing in Alternative Assets: Bennett discussed how the wealthiest individuals use self-directed Roth IRAs to invest in alternative assets such as real estate, private equity, and cryptocurrency.
Timing Conversions Strategically: DeLuca emphasized the importance of investing in Roth IRAs when in a lower tax bracket. He explained, “Ideally, you would want to invest in a Roth IRA when you are in a lower tax bracket. Once your salary grows, deferring taxes into a traditional 401(K) or IRA becomes a better tax strategy option.”
Planning for Healthcare Expenses: DeLuca highlighted the benefits of Roth IRAs in managing healthcare costs. He pointed out, “The average cost of long-term healthcare in America ranges from $35,000 to $108,000 a year. Having a Roth IRA bucket is so valuable, because money can be pulled for this without paying unnecessary taxes.”
Using Roth IRAs for Estate Planning: Bennett explained how Roth IRAs are advantageous for wealth transfer, as they don’t have required minimum distributions (RMDs) during the owner’s lifetime and withdrawals remain tax-free for heirs.
In conclusion, DeLuca encapsulated the overall message of the article: even those who are not ultra-wealthy can apply the same strategies to grow their wealth. He stated, “The ‘average person’ can do exactly what the 1% does. It’s about investing and staying disciplined.”
These strategies show that with discipline and smart planning, anyone can maximize the benefits of a Roth IRA for long-term financial success.