dmertz
Level 15

Retirement tax questions

A Roth IRA contribution might qualify for the Retirement Savings Contributions Credit, a tax credit that can reduce your income tax liability, the same as would a traditional IRA contribution.  But as VolvoGirl said, other then the possible tax credit I've mentioned there is no immediate tax savings for making a Roth IRA contribution.  The main benefits of a Roth IRA contribution is the tax-free growth, provided the holding requirements are met and tax- and penalty-free distributions of your original contributions at any time.  For many people the long-term benefit of tax-free growth will be greater than the immediate tax deferral of a deductible traditional IRA contribution.