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Subject:  Re: 401k , IRA, ROTH..can I hv all 3? Date:  2/6/2013  3:27 PM
Author:  pauleckler Number:  71354 of 75649

The best source of information on IRAs and Roths is IRS Publication 590 available at the irs.gov website--

http://www.irs.gov/pub/irs-pdf/p590.pdf

It includes information on deductibility vs income on IRA accounts and income limits on Roth contributions. (The numbers change every year making it difficult for us casual users to keep current.)

If you qualify for deductible contributions IRA and Roth IRA are equally attractive. They are mathematically identical when tax rate now is identical to that in retirement. Some say IRA is better due to lower income tax rate in retirement. (IRA contributions can be deductible but are taxed at ordinary income tax rates when you take distributions in retirement. Roth contributions are after tax, but distributions are tax free in retirement.)

If you do not qualify for deductible IRA contributions, Roth is clearly better. If you exceed the income limits for Roth, IRA contributions are still allowed but some would prefer alternatives such as taxable investments in the long term buy and hold strategy. You pay taxes only when you sell and then at capital gains rates (unless you exceed the new income limitations).
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