In contrast to a traditional IRA, contributions to a Roth IRA are not tax-deductible. However, withdrawals are tax-free
Can you think of any reason why someone might wish to use this type of IRA over a traditional IRA that allows tax deductible contributions? Compare and contrast the motivations that would lead to people to invest in either of them.
Those who contribute to Roth IRAs probably believe that they will be in higher tax rates when then retire. In contrast those who invest in traditional IRAs prefer the tax deductibility during their working years because they believe they will be in a lower tax bracket during retirement.
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The payoff matrix of economic profits above displays the possible outcomes for Bob and Jane who are involved in game of whether or not to advertise. After each player chooses his or her best strategy and sees the result
A) only Bob would like to change his decision. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. C) if Jane does not change her decision, Bob would like to change his. D) if Bob does not change his decision, Jane would like to change hers.
If prices increase rapidly
A) money's usefulness as a store of value is diminished. B) money increases in value. C) deflation is likely. D) prices will decline to their normal level.