Tax Differences Between A Traditional IRA And A Roth IRA

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There are a few tax differences between a Traditional IRA and a Roth IRA. As you noted, Traditional IRA contributions are tax deductible on both state and federal tax returns for the year you make the contribution while withdrawals in retirement are taxed as ordinary income tax rates. You cannot deduct contributions to a Roth IRA, but earnings and withdrawals are generally tax free. I 'll also note that a Roth IRA is essentially a "bet" on your tax rate at retirement. If you expect your tax rate to increase in retirement, then you would prefer a Roth IRA vs. Traditional IRA. Of course, trying to predict future tax rates is highly questionable, but you would expect as your career grows that you earn more money (and pay higher taxes, irrespective

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