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TurboTax (which I use and am happy with) uses taxaudit.com to provide audit protection. I've never selected that option, and good thing. Turns out, taxaudit.com gets mixed reviews, and some of the advice on their website is just wrong. For example, DS used TT and got on their email list, and was sent the following link: http://blog.taxaudit.com/?s=Roth+IRA
Didn't make sense to him, so he asked me about it. Exchange as follows (please let me know if I missed something):

Me:
The basic concept is:
1. Pay now (in the example, client owes $1500 more in taxes now if he uses a Roth instead of Traditional IRA). However, later on when he withdraws from his Roth IRA, he will owe no tax on either contributions or earnings.
- or -
2. Pay later (in the example, client gets $1500 tax break now if he uses a Traditional instead of Roth IRA). However, later on when he withdraws from his Traditional IRA, both contributions and all earnings/appreciation will get taxed.

Here's where the author is confused (i.e., wrong):
Roth IRA earnings are likely to be tax-free. But will that translate into $1,500 or more in tax savings down the road? We really won’t know that answer until we get “down the road.” All I do know is that he will need at least $1,500 in savings down the road just to “break even” on his decision to contribute to a Roth IRA, as compared to a traditional IRA.

- I don't know what he means by "likely to be tax-free." Under current law, they will be tax-free.

- As far as needing $1500 in savings to break even, the implication is that with a Traditional IRA the client gets to keep both his initial $1500 tax break and his $5000 contribution. He doesn't. When he withdraws his $5000 contribution, he has to pay $1500 in taxes on the withdrawal. So he's really at "break even" right off the bat, not even looking down the road. Specifically, in the author's example:
With a Roth IRA, starting with $6500 in his pocket, he ends up with $5000 in the IRA, and $1500 to taxes, for a net of $5000 that he can keep.
With a Traditional IRA, starting with $6500 in his pocket, he ends up with $5000 in the IRA and $1500 in his pocket for now. When he withdraws $5000 from the IRA and adds that to the $1500 in his pocket, he pays $1500 in taxes on the withdrawal, for a net of $5000 that he can keep.

DS:
Thanks! So . . . is it a wash? If it is, seems like $1500 in the tax-payers pocket today is worth more than the same $1500 later. The tax-payer can invest the current $1500 now instead of later, correct? So, your explanation helps a lot, but I think I'm still a bit fuzzy on this stuff. Thankfully I'm not a CPA or financial adviser :)

Me:
It's a wash if there is zero appreciation. Let's suppose there is 5% per year appreciation, and marginal tax rate remains constant at the 30% used in the example. Then, after 20 years:

1. Roth IRA = $13,266
After taxes = $13,266 he can keep

2. Traditional IRA = $13,266
After taxes = $9,286
Meanwhile, the invested $1500 has ostensibly appreciated 5% per year, but every year the gains are taxed, so net appreciation is 3.5%, resulting in growth to $2,985.
Total = $12,271 he can keep
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