Another installment of our reporter’s extended interview with noted retirement specialist Phil Cannella, founder and CEO of First Senior Financial Group and host of The Crash Proof Retirement Show™.

Question: Is it true that you can set up an account where you pay no taxes at all?

Phil Cannella: Absolutely! And the only thing better than paying taxes in one lump sum or even stretching paying taxes over a lifetime is not paying taxes at all. Until the Roth IRA came along with its ability to build tax-free wealth, stretching a traditional IRA used to be a popular thing to do. But that means paying the taxes over the life of the account. Why would anybody in this country want their children to stretch taxes over their life expectancy when they can instead stretch a tax-free Roth? I don’t know about you but I would rather have a tax-free income over a lifetime than a taxed income over a lifetime, and I’m sure my heirs would appreciate it, too.

Q: I can’t argue with that.

Phil Cannella: It should come as no surprise that when the tax-free Roth conversion law came out, the notion of stretching a traditional IRA became less desirable. You see, that’s the divine and very distinct difference between stretching a Roth IRA versus a traditional IRA. Collect income with taxes or collect income without paying taxes? It’s as simple as that. Once you convert your IRA or any retirement account to a Roth, it remains tax-free forever, because it gets grandfathered into current tax laws.

Q: Do you mean literally forever?

Phil Cannella: Yes. The IRS can’t touch it no matter what tax legislation is passed.

Q: Give an example of how that might work.

Phil Cannella: Let’s say you convert your IRA to a Roth tomorrow and name your son as a beneficiary, then proceed to live another 10 wonderful years. Soon after you pass away, tax laws change and the IRS puts a stop on the conversion of any more Roth accounts. That’s it—they’re history. But your son’s is safe and available for him to stretch over his lifetime. All existing Roth accounts are exempt, so his inherited account will remain tax-free. Taxes will fall due on traditional IRAs where taxes haven’t been paid. But you were smart. You paid taxes on that account 10 years ago when the law was available and you converted your IRA to a Roth.

Q: But I’ve heard you say before that people should “get it while the getting is good.”

Phil Cannella: Given the tax predicament our country will face in just a few years from now and a Social Security system that’s on the verge of going broke, I presume that the IRS will put a stop to new Roth conversions. They’ll probably increase the tax rate; they would have to. I don’t see where they would find the tax dollars to fund our country’s social programs in the future without taxing retirement accounts and traditional IRAs that were never converted to Roths. Taxes don’t get paid on them until money is withdrawn whether in part or in whole, but they will be paid sooner or later. Well then, should Roth conversions ever go away, your decision to take advantage of the law will have turned out to be an even smarter thing to do! You’ll have something that nobody else can get, because the opportunity will no longer be available. By now, the power and versatility of a Roth IRA should be crystal clear. This powerful tax-free account is a souped-up financial vehicle that delivers higher performance in a number of ways. It can decrease your tax burden. It can help you avoid forced RMD withdrawals in your retired years if you don’t need the money. And it can produce non-taxable income for you when you need it and can be stretched to your heirs.

Q: That’s a powerful account indeed.

Phil Cannella: You can transfer this instrument and its tax-free holdings to the people you love, and if it’s managed properly, it has the potential to accumulate faster than your heirs withdraw from it. This potential is created by the fact that your heirs will be younger than you are, and their RMD will be based on their life expectancy, not yours.