Which retirement plan does NOT qualify for a federal income tax deduction?

• A. Roth IRA
• B. Traditional IRA
• C. 401(k)
• D. 403(b)

Answer: (A)

Contributions are treated differently for tax purposes based on whether they are pretax or after-tax. A Roth IRA is funded with after-tax dollars, so you don’t get a deduction for your contributions on your federal return in the year you contribute. You don’t reduce current taxable income, though earnings and qualified withdrawals can be tax-free later. Traditional IRAs may be deductible depending on your income and whether you’re covered by an employer plan, and employer-sponsored plans like a 401(k) or a 403(b) use pretax contributions that reduce your current taxable income up to the plan limits. So the reason the Roth IRA doesn’t qualify for a federal income tax deduction is that its contributions are made with after-tax dollars, unlike the other options.