Taxpayers often have to decide between contributing to a traditional nondeductible IRA or a Roth IRA.In making the comparison between the two IRAs,which models should the taxpayer use?

Question

Quizplus · Accepted Answer

A)The Deferred Model is appropriate for the traditional nondeductible IRA because after-tax funds are invested,earnings compound without tax,the earnings are taxable at distribution.The Exempt Model applies to the Roth IRA because after-tax funds are invested,and earnings are exempt from taxable income while compounding and at distribution.

Taxpayers Often Have to Decide Between Contributing to a Traditional