Typically I receive a bi-weekly check, which is naturally taxed. And from the net income I'm able to contribute some into a basic IRA. However, whenever I will receive a distribution I'm taxed again.
Double tax the way I interpret. Is it the age of 70-1/2, for no more taxes to be paid on a distribution?
Looking forward to your response. Thank you
If you DEDUCT your annual IRA contribution on your tax return, then when you withdraw the money at retirement it will all be taxed as ordinary income. (Yes, you contribute the money from your net paycheck, but most people list the IRA contribution as an itemized deduction on your tax return.)
If you do not deduct your IRA contribution, then only the gains will be taxed “pro-rata” when the money is taken out. And if you contribute to an after-tax Roth IRA, then all the gains come out tax-free!
Check with your tax preparer or accountant to make sure you are doing the most tax-advantaged type of contribution for your situation.