Is IRA Interest Income Taxable Income?
Interest Income Money in an IRA can earn interest if it is invested in certificates of deposit, money market accounts,other bank accounts and bonds. Money invested in stocks or mutual funds earn returns based on the performance of the companies invested in. Tax-Sheltered Account Status All IRAs hold tax-sheltered account status which means that the interest earned on the money in the account is tax-free at least as long as the money remains in the account. Roth IRAs Roth IRAs do not require you to ever pay taxes on the interest that you earn on the account even when you remove it (that is, apart from early withdrawal, see below). However, you must contribute after-tax money to your Roth IRA. Traditional IRAs Conversely, interest earnings and contributions to the traditional IRA must be recorded as taxable income on your tax return in the year that you take the money out of the account. However, you are able to contribute pre-tax money to a traditional IRA. Purpose The tax benefits on t
