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Financial Planner

Category - Tax Planning

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What is a disadvantage to Roth IRAs?

The distributions are taxable
You cannot deduct current contributions
The interest rate is very low
The funds can only be distributed to beneficiaries

Explanation

Answer: B - Roth IRA distributions are not taxable. However, you cannot deduct contributions to Roth IRAs as you can with traditional IRAs. You should weigh the options and determine the pre-tax and post-tax values of these investments to determine what is best for the client.

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