are roth ira contributions deductible
You are eligible for only a partial deduction on your Traditional IRA. Instead of contributing the nondeductible amount to a Traditional IRA, where earnings grow tax-deferred, you can contribute the amount to a Roth IRA where earnings grow tax-free. You are eligible for only a partial Roth-IRA contribution. The limits on the amount you can deduct don't affect the annual amount you can contribute. However, you can never claim a tax deduction for more than what you contributed to your IRA that year. Keep in mind that whether or not your contribution is tax-deductible shouldn't be the only consideration in choosing an IRA. Differences from a traditional IRA. In contrast to a traditional IRA, contributions to a Roth IRA are not tax-deductible. Withdrawals are tax-free under certain conditions (for example, if the withdrawal is only on the principal portion of the account, or if the owner is at least 59½ years old). If you (or your spouse, if applicable) are covered by an employer retirement plan, you can still make contributions to a traditional IRA, but depending on your income, they may qualify as partially tax-deductible or totally non-tax-deductible IRA contributions. Details are provided at irs.gov: If your Traditional IRA contribution is not deductible, you may still make a non-deductible IRA contribution to it. Alternatively, you may contribute to a Roth IRA, provided your MAGI satisfies the Roth-IRA eligibility limits for 2013, which are as follows: A Roth IRA (Individual Retirement Arrangement) is a retirement plan under US law that is generally not taxed, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. In both Roth IRA and non-deductible traditional IRA, contributions are non-deductible, meaning that you fund them with after-tax money. The major difference comes from the way earnings are taxed. Earnings are taxed as ordinary income if you withdraw them from a non-deductible traditional IRA. But that income limit for rollovers disappears in 2010. You can start contributing $5,000 per year to a traditional IRA now, then roll it all over into a Roth when the law changes in 2010. To switch to a Roth, you'd have to pay income taxes on the total IRA balance if you've made only tax-deductible contributions. But if you've made only nondeductible contributions to the IRA, then you'll be taxed only on the earnings. After you pay the tax bill, the money grows tax-free in the Roth. You can contribute the full $5,000 to a Roth IRA (or $6,000 if 50 or older)only if your adjusted gross income in 2008 is less than $159,000 if married filing jointly or $101,000 if single. Married filers can make a partial contribution if their joint income is less than $169,000 ($116,000 if single). The primary benefits of contributing to an IRA are the tax deductions, the tax-deferred or tax-free growth on earnings and, if you are eligible, the non-refundable tax credits. To get the most out of contributing to your IRA, it's important to understand what these benefits mean and the limitations placed on them.
No, Roth IRA contributions are non-deductible.