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Subject:  Re: Roth IRA question Date:  6/30/2020  1:22 PM
Author:  aj485 Number:  130836 of 131149

I forget where I came across this, but, although contributions to a Roth are not deductible, is it true you get some sort of credit for them nevertheless? I remember a long time ago my accountant said always to let him know when I contribute, but I never understood why.

It's always a good idea to track how much has been contributed to a Roth IRA, because you are allowed to take contributions out tax and penalty free, even if you aren't 59 1/2 yet.

I'm wondering if there is some sort of benefit to the Roth for tax purposes. I think I read somewhere recently about some tax deduction for participating, but can't find it right now.

If you meet income limits, you can get the 'Retirement Saver's Credit' for contributing to either an IRA or an employer sponsored retirement plan

I also ask because I recently signed up for a new 401k and noticed for the first time I have access to Roth-401. I think, if I went through the process correctly, I can do both...401 and Roth-401. By doing both, do I get a double advantage?

Not really. You will just split the amount that you, as an employee, can contribute to the 401(k). In 2020, an employee can contribute a total of $19,500 to any and all 401(k)s. So if you have more than one employer during the year, it's up to you to track how much is contributed, and ask work with your employer(s) to return any excess to you.

As with all Roth vs. Traditional decisions, whether you contribute exclusively to one account type or the other, or split your contribution depends on your specific circumstances - what your current tax bracket is and what your expected future tax brackets will be.

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