John M. Hoffman & Associates CPAs

Frequently Asked Tax Questions

Individual Retirement Accounts – IRAs

ROTH IRA:

"How does a ROTH differ from a traditional IRA?"

• There is no deduction for a contribution to a ROTH IRA.

• The growth of the assets in a ROTH IRA are permanently free of tax so long as certain rules are followed.

Let’s point out the biggest no brainer out there. If a taxpayer has the choice of a non-deductible IRA and a ROTH IRA, which should they chose. The “no-brainer’ answer is that the ROTH is the better choice. When you compare the two, you note that there is no tax deduction for the contribution but in the non deductible IRA the growth is taxed upon withdrawal where in the ROTH, the growth is permanently tax free. So tax deferred growth or tax free growth – the tax free is the no brainer!

"Who is eligible for a ROTH IRA contribution?"

"How much can I contribute to a ROTH IRA?"

"What rules must I follow to make the income my ROTH earns free of tax?"

"What about minimum distributions for ROTH IRAs?"

"What if I inherit a ROTH IRA?"

"What is this thing about ROTH conversions?"