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Traditional vs Roth IRA; qualified vs non-qualified plans

1) Both nondeductible contributions to a traditional IRA and contributions to a Roth IRA are similar in the sense that neither provides a tax deduction at the date of contribution. Which of the two types would be most advantageous to taxpayers, and why?

2) Your client is about to establish his own business and hire at least 10 employees. They ask you for advice concerning establishing a qualified vs. a non-qualified retirement plan. What do you advise your client? Would your answer change if you were a potential employee? Why or why not?

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1) Both nondeductible contributions to a traditional IRA and contributions to a Roth IRA are similar in the sense that neither provides a tax deduction at the date of contribution. Which of the two types would be most advantageous to taxpayers, and why?

Yes, they are both non-deductible at the front and both are subject to limitation for the amount that can be deposited, but the huge advantage to a Roth is that earnings will not be taxable when they are withdrawn.

For example, let's say you funded a Roth and bought Google stock inside it when the stock cost $350 per share. Now you take a distribution when the stock is selling for $600. You would pay no tax on the distribution.

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The 455 word referenced solution presents a good discussion of each of the questions together with examples and applications.

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