
Before Tax

After Tax

Amount at Retirement

Taxable Investment



Deductible IRA



Nondeductible IRA



Roth IRA



Annual Distribution

Taxable Investment



Deductible IRA



Nondeductible IRA



Roth IRA



Total Distribution

Taxable Investment



Deductible IRA



Nondeductible IRA



Roth IRA



Note:
Taxable Investment: Investment gains from taxable investment are taxed each year. You do not pay tax again at distribution time.
Deductible IRA (Traditional IRA): Contributions are deductible on your tax return, and any earnings can potentially grow taxdeferred until you withdraw them in retirement. For comparison purpose you input aftertax contribution in this app. For example your annual aftertax contribution is $5,500, the pretax contribution is $6,470 assuming 15% tax bracket. Both contribution and investment gains will be taxed at the distribution time.
Nondeductible IRA: Contributions are made with aftertax money. The investment gains will not be taxed each year until you withdraw the money. The investment gains will be compounded. Only the investment gains are taxed at the distribution time.
Roth IRA: Contribution are made with aftertax money. The investment gains are not taxed each year. You don't pay any tax for the investment gain when you withdraw it either. You do not pay any tax at distribution time.

