Are contributions made to my Roth IRA deductible?
Contrary to the traditional individual retirement account,
contributions to a Roth IRA ARE NOT DEDUCTIBLE. However,
the qualified distributions of earnings are tax free.
It should also be noted that under the current tax code,
an individual can make contributions to both a Roth IRA
as well as a traditional IRA but the maximum contribution
to all IRAs is limited to $2,000. However, beginning
in 2002 the amount of contribution increases to $3000.
The current tax code has undergone a lot of changes
over the last few years. A tax payer is well-advised
to research the pros and cons associated with both Roth
IRAs as well as traditional IRAS and to be able to distinguish
the differences between the two types of IRAs, especially
with regard to withdrawal penalties and taxation on distributions.
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