roth ira vs mutual funds
What are the pro’s and con’s of non deductable ira contributions? In 2010 they can be converted to roth?
In 2010 you can convert these to a roth. Is this a good strategy vs. investing in a non-tax sheltered but tax advantaged mutual fund or other investment.
There are two types of IRAs. One is called a Traditional IRA and the other is called Roth IRA.
A traditional IRA is where you may be able to make your contributions tax deductible. When you make withdrawals, it will be fully or partially taxable. If some of your contributions were not tax-deductible, then you won’t pay tax on this. If you made some of your contributions tax-deductible, then you will pay tax on this, including earnings, dividends, and capital gains.
In 2010, you can convert your Traditional IRA into a Roth IRA, but you will pay taxes on the earnings and contributions you made tax-deductible. When it is converted into a Roth IRA, you must hold the converted assets for 5 taxable years (Jan 1, 2010 – Dec 31, 2015) or you will pay a 10% tax on them.
A Roth IRA is where none of your contributions are tax-deductible, so all your withdrawals after age 59 1/2 can be tax-free.
