Contributing to Trad.IRA even if not deductible?

[Yah-Tah-Hey]

Originally Posted By: NormanBuntz
Another short answer: no.

But make sure you max out your contributions to any 401-K, Flexible Spending Account or Healthcare Savings Account. Also if your taxable income allows you to make a Roth IRA contribution, that's a win win.

Some people recommend annuities. Keep your eyes wide open. Most annuities are much better for the company or salesperson than they are for the investor. If you must, check out annuity options with Vanguard and Fidelity Investments for the lowest costs and fees.
Right you are NormanB. Talk to most financial advisors about what to do with an annuity and most will try to get you into another annuity. They're money makers.

 

[Mr Nice]

ETF is much better than any annuity.

 

[JHZR2]

No, do a backdoor roth.

Originally Posted By: Astro14
To do a Roth conversion you must: 1. Be within the Roth income limits and 2. Pay the tax on the gains in your IRA.

So, no, this wouldn’t work for QP...


You sure??

You can add post tax money to a traditional IRA, then do a transfer to a Roth. We make too much to be eligible for Roth but have been studying this plan a bit and it appears viable and common. There are different schools of thought regarding how long to leave money in the traditional before rolling.

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

 

[99Saturn]

Backdoor Roth is what you want.

 

[Vikas]

Before you do the backdoor roth, make sure you understand how the taxes are computed. It does NOT go by the single account but rather your entire portfolio is considered and then proportionally taxed. So if you do have say roll-over IRA and previous traditional deductible ira, they are all taken in to consideration.

 

[Astro14]

Originally Posted By: ArrestMeRedZ
Originally Posted By: Astro14
To do a Roth conversion you must: 1. Be within the Roth income limits and 2. Pay the tax on the gains in your IRA.

So, no, this wouldn’t work for QP...


Half right Astro. Check with your accountant, but it is my understanding under currect tax law you do not have to be within Roth contribution limits to do an ordinary IRA to Roth IRA conversion. This is the large loophole that is addressed in many publications.


Well, I stand corrected, then!

The taxes on the gains might still be too daunting for me, personally, but QP might be able to do the “back door Roth” and I’m gonna look more closely at this.

Thanks!

 

[pbm]

Originally Posted By: Mr Nice
Ok, you were clearer in your question after your second post.

The only bad about any IRA is that the maximum contribution limits are soooo little. They should be $15-20K in my opinion.




The other 'bad thing' about a traditional IRA is that we don't know what the tax rates will be when we go to take it out....it could be much higher than it currently is with the direction the country is going (milenials believing that socialism is good is an ominous sign IMO). Also, RMD (Required Minimum Distribution) can affect your Social Security according to a retirement seminar I recently attended but I can't remember the particulars.

So to answer the OP's question....I wouldn't contribute to an IRA unless it was a ROTH.

 

[Mr Nice]

Roth is a no brainer for most people.
Yes, the Bozo Generation expects free everything..... no need to save and invest.

Most people will have distributions on their Traditional IRA waaaaay before RMD kicks in at age 70.5

 

[ArrestMeRedZ]

Originally Posted By: pbm
The other 'bad thing' about a traditional IRA is that we don't know what the tax rates will be when we go to take it out....it could be much higher than it currently is with the direction the country is going (milenials believing that socialism is good is an ominous sign IMO). Also, RMD (Required Minimum Distribution) can affect your Social Security according to a retirement seminar I recently attended but I can't remember the particulars.

So to answer the OP's question....I wouldn't contribute to an IRA unless it was a ROTH.


Some good points. RMDs won't currently (I stress currently because there is no telling if the government won't start means testing Social Security as one of the "fixes" in the future) effect your SS, but it may well push your income up to where SS payments will become taxable. Plus RMDs may impact your Medicare Part B payments - they go up with high enough income. This is one of the many reasons I'm willing to push my current income into the 25% tax bracket with ordinary IRA to Roth IRA conversions.