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There is no tax deduction available for a Roth IRA contribution. However, many people will get a tax deduction for their traditional IRA contributions. A traditional IRA is a type of individual retirement savings account in which contributions are tax deductible in the year that they are made. These funds will grow, tax deferred, until they are withdrawn.
The funds that are contributed to a Roth IRA will continue to grow tax free. No taxes are paid on the earnings, which do not even need to be reported to the
There are some eligibility restrictions in regards to an applicant’s filing status and is modified to adjusted gross income. The income limitations change each year and should be researched to ensure guidelines are followed. There is also a time period when contributions can be made. When creating a financial plan, this should be taken into consideration. Funds can be contributed to the account between
Whereas 401(k) and traditional IRAs have an age to begin distributing money, there is no age in which money must be distributed for a Roth IRA. Thus, this type of retirement planning account is ideal for passing wealth to children and grandchildren.
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