Answer:
Posttax
- Roth IRA
Pretax
- 401(k)
- traditional IRA
- Social Security
Explanation:
Contributions to Social Security, traditional IRAs, and 401(k) plans are not taxed at the time of the contribution. Contributions to Roth IRAs, on the other hand, are made with posttax dollars, which means the income contributed is taxed.
Withdrawals from Roth IRAs made after age 59.5 are not subject to taxes. Compounding interest payments and capital gains can generate substantial growth in such an account over time, so the postretirement tax benefits can be considerable. Benefits paid to retirees from the other systems are taxed as income at that point.
