Author Topic: Non deductible traditional ira  (Read 1446 times)

Blunderbuss

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Non deductible traditional ira
« on: December 02, 2014, 10:33:14 AM »
So I have maxed out my 401k, roth ira, and hsa and have moved on to taxable accounts.

I saw an article about non-deductible traditional IRAs. I know this is how large income folks do backdoor roths. But is there value in just the non-deductible IRA on its own? Also, is it legal to do a Roth and backdoor roth in the same year?

Thanks

FIPurpose

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Re: Non deductible traditional ira
« Reply #1 on: December 02, 2014, 10:56:09 AM »
If you have already maxed out your roth ira, and you were eligible for it, then you can't do a backdoor-roth.

The backdoor roth is if you are above the income restrictions on a roth ira, but even then it still has the same limit of $5500 per year. So you've already gained your max benefit.

seattlecyclone

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Re: Non deductible traditional ira
« Reply #2 on: December 02, 2014, 11:40:42 AM »
Yes, the IRA contribution limit is an aggregate across Roth and traditional accounts, so you can't do non-deductible traditional contributions if you have already done the full amount of Roth contributions.

As to the question of leaving the money in there versus rolling it over to Roth right away, there was some discussion about that in this thread about after-tax 401(k) accounts. For some people, leaving the money in the account might give an early retiree penalty-free access to more of their money before "normal" retirement age. That logic applies equally well to non-deductible traditional IRA contributions as it does to after-tax 401(k) contributions.

brooklynmoney

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Re: Non deductible traditional ira
« Reply #3 on: December 08, 2014, 08:20:08 PM »
I have a non-deductible IRA that I've been contributing to for going on five years now. I don't plan to backdoor it into a Roth because I also have a rollover IRA with a lot more in it, because it will be taxed on a pro-rata basis.Also, the last thing I need is more taxable income.