Explain what makes IRA Contributions deductible or not. Can a contribution still be made to an...

Explain what makes IRA Contributions deductible or not. Can a contribution still be made to an IRA if it is not deductible?Discuss in 2-5sentences.

Explain the similarities and difference between Qualified Roth IRA distribution and a Non-Qualified Roth IRA distribution. Discuss in 2-5 sentences.

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Expert Solution

(1): Traditional IRAs are tax deductible while IRAs that are not traditional are nondeductible IRAs. With regards to nondeductible IRAs one can make contributions with after-tax dollars. Yes, a contribution can still be made to an IRA if it is not deductible. In fact contributions can be allocated across different kinds of IRAs and you will be allowed to make additions to a tax-deductible, nondeductible, or Roth IRA in a given tax year, as long the combined contributions do not exceed the limit.

(2): Similarities between Qualified Roth IRA distribution and a Non-Qualified Roth IRA distribution is that both have to be reported on your income tax return. Both have to be reported on Form 1040 or form 1040A. In terms of differences Qualified Roth IRA distribution is tax free and penalty free. On the other hand in case of Non-Qualified Roth IRA distribution you will have to pay taxes at your ordinary income tax rate on earnings plus an additional 10% penalty if none of the exceptions related to penalty is applicable.

jeff jeffy answered 1 year ago

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