Traditional IRA when covered by 401k?

[fsohn]

Hello Mustachians:

I've searched the forum and the interwebs on this question, and I haven't found a clear answer, so I thought I'd ask the community.

I currently contribute the max to my employer 401K -- no match, but that's a consequence of high salary and somewhat cheapo employer (generous to exempt staff, less so to non-exempt w/r/t retirement benefits).

Anyway, my student loans will finally be coming off the books early next year, as I continue to pay them down aggressively.  Once that's the case, I'll have plenty of extra money to invest.

I would like to max out a traditional IRA, knowing that I would not qualify for a deduction from my income, to shield $5500 per year (or whatever the max will be in coming years) as time goes by. 

Does anyone else do this, and if so, has it caused any problems for you?

[seattlecyclone]

If your income is too high to deduct a traditional IRA contribution, you will almost certainly find it better to contribute to a Roth IRA than a non-deductible traditional IRA.

[fsohn]

Unfortunately, my income is too high to contribute to a Roth IRA, too.  Or do you mean that I should contribute to the IRA and do a Roth IRA conversion immediately?

[seattlecyclone]

Oh yes, then a traditional contribution and immediate conversion is the way to go as long as you have no pre-tax traditional IRA money at the moment. Search for "backdoor Roth" for more information about this.