Author Topic: Traditional Ira (non deductible) vs taxable  (Read 586 times)

StressLess

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Traditional Ira (non deductible) vs taxable
« on: January 06, 2017, 10:22:40 AM »
Hi

The Mrs has a rollover Ira so can't do a backdoor Roth. 

In this case would a traditional non deductible Ira beat a taxable account or is it the other way around?

Suppose the math is very complex just sitting here scratching my head trying to work it out.

Any help appreciated!

dandarc

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Re: Traditional Ira (non deductible) vs taxable
« Reply #1 on: January 06, 2017, 10:31:56 AM »
Are you sure your income precludes regular Roth IRA contributions?  If so, I'd go taxable, if you can't roll her IRA into a 401K or similar and do the backdoor Roth.

IRA Pro is that your growth will be tax deferred.

Potential IRA Con is that eventually that growth will be taxed at ordinary income rates.  Capital gains and dividend rates are currently lower than ordinary income rates.  Another potential con is the record keeping you'll have to do to avoid paying taxes twice on the contribution amounts.

StressLess

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Re: Traditional Ira (non deductible) vs taxable
« Reply #2 on: January 06, 2017, 10:48:28 AM »
Thanks.

Yeah can't roll over the Ira into work plan and magi too high.

Thanks for the explanation on cap gains/dividends makes sense. Key is sticking with index low turnover funds.

Also not to overlook the record keeping fun on cost basis and all that fun stuff...

Seems like taxable is the way to go