Are contributions to a Roth IRA tax deductible?
Contributions to a Roth IRA are not deductible. This is a major difference between Roth IRAs and Traditional IRAs. Contributions to a Traditional IRA may be deductible on your federal income tax return depending on whether or not you are an active participant in an employer-sponsored plan, your tax filling status and on your income level. Are the Earnings on my Roth IRA Funds Taxed? Contributions to Roth IRAs are made with after-tax dollars. Any dividends on or growth of investments held in your Roth IRA are generally exempt from federal income taxes and will not be taxed until withdrawn by you, unless the tax exempt status of your Roth IRA is revoked. If the withdrawal qualifies as a tax-free withdrawal (see Withdrawals), amounts reflecting earnings or growth of assets in your Roth IRA will not be subject to federal income tax. Which is Better, a Roth IRA or a Traditional IRA? This will depend upon your individual situation. A Roth IRA may be better if you are an active participant in
