by Tom Teckmeyer

When Arthur Clarke's book 2001: A Space Odyssey came out in 1968, I remember thinking, "2001 . . . that will take forever to get here." Of course, when you're a kid, the passage of time is very different. Well, lo and behold, here we are in 2001. Looking back now, those 33 years came and went quicker than a snap of my fingers. The years not only come and go quickly, but we're already two months into the "new" year. This makes a good time to stop and reflect as well as look ahead.

Solomon gives us some good insight: "A good man leaves an inheritance to his children's children" (Proverbs 13:22). A "good man," in this context, is one who plans and prepares well--he or she is someone who has a vision for the future. A "good man" is generous towards his family and wants to send a message to a generation he may never see.

Did you realize that an inheritance can come in many different shapes and sizes? Certainly an inheritance of godly values and biblical truth is the most important. Another inheritance is an understanding that God wants us to be good stewards of the financial resources He has entrusted to us. One way of demonstrating this truth of being a good steward is to pass on a financial inheritance to your grandchildren.

In a very practical way, you can apply the lessons in Proverbs 13:22 by leaving your legacy through a Roth IRA. If you are looking for a way to pass on retirement savings, this can be an excellent option to consider. You may transfer or convert traditional IRA assets to a Roth plan (certain qualifications do exist). While you have to pay taxes now on the converted funds, you and your beneficiaries gain these things:

• In a Roth IRA, minimum distributions during the owner's life are not required. (Compare that to a traditional IRA where withdrawals are mandated when the owner reaches age 701/2.)

• Beneficiaries of a Roth IRA receive the assets completely income tax free, unlike money in a traditional IRA which is subject to income taxes.

• Beneficiaries can spread out Roth IRA distributions over their lifetimes. That could translate into tremendous tax benefits--particularly if your beneficiary is a young child, as illustrated in the following illustration.

Let's assume you converted your traditional IRA to a Roth, and the account's value totaled $10,000 when it got passed on to the beneficiary, your 12-year-old grandson. While the child must start taking required annual withdrawls (based on IRS life expectancy tables), he could do so over his entire life. The chart below shows you the total tax-free withdrawls your grandson would have received if the money had been invested in Pioneer Fund 70 years ago. As you can see, a $10,000 Roth inheritance would have generated $7.3 million in tax-free withdrawls over your grandson's lifetime. (Results are based on Pioneer Fund's 12-month returns at net asset value for each year ended 3/31.) The example is not meant to imply an investor's future experience in Pioneer Fund or any investment.

My thanks to Pioneer Funds for helping with this article (Pioneer was used in this example because it has been in existence for more than 70 years).

Clearly the Roth IRA represents more than tax-free growth potential. It may be an ideal way to pass on an inheritance to your children's children.

Teckmeyer Financial Services is a full service investment firm based in Omaha, Nebraska. If we can be of any help to you in managing financial resources God has entrusted to you from a biblical perspective, or if we can simply pray for you, please call us at (800) 905-7526, or visit our Web site at TeckmeyerFinancial.com.