WHAT ARE THE DIFFERENCES BETWEEN A REGULAR IRA AND A ROTH IRA?
There are differences in both the deductibility of contributions and the tax treatment of withdrawals. For a regular IRA, contributions may be tax-deductible, depending on the level of your adjusted gross income (AGI) and whether you are a participant in the retirement plan sponsored by an employer. Roth IRA contributions are not tax-deductible under any circumstances. Distributions from a regular IRA are taxed to the extent they represent either earnings or pretax contributions (i.e., contributions that were deducted on your return when made). Distributions from a Roth IRA-if they have been in the account for at least five years-are generally tax-free if the withdrawal occurs after you reach age 59 , die, or become disabled. Thus, one of the major advantages of a Roth over a regular IRA is that earnings within a regular IRA are tax deferred, while earnings within a Roth may escape taxation permanently. THE TAX TREATMENT OF A CONVERSION TO A ROTH IRA In general, you’re taxed as if you
