We execute this strategy for our non-retired clients that qualify on a regular basis.  (Note there is still time to make your 2012 Roth contribution - must be done by Monday April 15.)

This is simple and applies to the following situation: 

• your earned income level is not too high to make the maximum Roth contribution and
• you have a taxable savings or an investment portfolio from which to fund the Roth IRA each year.

We simply transfer the money from the taxable account into the Roth each year as your allowed annual contribution and invest it.

Why is this so great? Let me count the ways!

First you are funding it from money you already have.  You can still max out your 401(k).  Since funding the 401(k) is enough sacrifice for most, it's nice to be able to make the contribution not from your income.

Secondly, you are essentially moving your assets from the taxable column to the non-taxable column.

Finally, the Roth IRA is by far the best retirement savings vehicle assuming you qualify and can afford to make the yearly contributions. The Roth is completely tax free in retirement and there are not required minimum distributions (RMD) as there are with IRA's, 401k's and other qualified plans.

To further complement this strategy - since we do not sell products with commission but rather charge transparent fees - we have freedom to apply those fees as we would like.  So the advisory fees are not taken from the Roth or other qualified plans, but rather from the taxable account.   In effect it is essentially another small contribution to the Roth.

in retirement, the Roth is the last retirement vehicle you access since it continues growing tax-free and is used tax-free.