MAGNOLIA – Two professors from the Southern Arkansas University College of Business and a local financial planner have published a paper on the benefits of Roth IRAs as part of an overall retirement plan.
Dr. David Ashby, professor of finance, and Dr. Terrye Stinson, professor of accounting, along with Darla Williams of Mustard Seed Financial LLC, coauthored the paper “Investment Strategies for Tax Diversification: Don’t Put All Your Eggs In One Tax Basket”, which appears in the January issue of the Journal of Business and Economics Research.
The paper focuses on the income tax liabilities of retirees and how such liabilities can be minimized through the combined use of taxable, tax-deferred and tax-free accounts such as the Roth IRA. Recent changes in Roth IRA laws allow wider use of Roth accounts by individuals who were previously limited to such accounts. Roth IRAs, while not deductible at the time a contribution is made, allow for earnings to be withdrawn tax-free in retirement provided certain conditions are met. The use of Roth accounts may allow a retiree to incur less taxable income, thereby reducing the total tax liability in retirement years. Roth accounts have the additional advantage of not requiring minimum distributions at any age. Traditional retirement accounts require annual taxable distributions once the retiree reaches a certain age, thereby increasing tax income liability.
Ashby is the Peoples Bank Professor of Finance at SAU and serves on the Council on Examinations with the Certified Financial Planner Board of Standards in Washington, D.C. Stinson is the Louis Blanchard Professor of Accounting at SAU and former president of the Arkansas State Board of Public Accountancy. Williams is the chief compliance officer and a managing member with Mustard Seed Financial LLC, a fee-only financial planning firm with offices in Magnolia, El Dorado and Helena.
For more information on the group’s paper, contact the Southern Arkansas University College of Business at (870) 235-4300.
