Recent Topics
Liqui Moly Top Tec 1800
by Chuckh. 12/12/18 07:56 PM
2006 Pathfinder Transmission Shudder
by Bluestream. 12/12/18 07:10 PM
Maybe E-10 is better? - PentaStar (Flex Fuel)
by StevieC. 12/12/18 06:52 PM
Shipping cost
by Fitter30. 12/12/18 06:45 PM
Purolator P1 14476 CUT OPEN
by 53' Stude. 12/12/18 06:00 PM
Which car to buy?
by jrcowboys. 12/12/18 04:55 PM
New Tire Cracking
by robd. 12/12/18 04:43 PM
SAR B6P - Thoughts?
by 28oz. 12/12/18 03:59 PM
Time to sell the 1-ton Dually
by 02SE. 12/12/18 03:55 PM
Shell Rotella Grease
by WMW0505. 12/12/18 02:27 PM
Need to add attic ladder in stairwell
by Klutch9. 12/12/18 12:51 PM
Mystik JT-8 15w40, 2015 RAM EcoDiesel, 4,995 mi
by SavagePatch. 12/12/18 12:45 PM
Fram Tough Guard Air Filters at Rock Auto
by Snagglefoot. 12/12/18 12:42 PM
Electrical contact cleaner
by CELICA_XX. 12/12/18 12:32 PM
5w-30 in 277k mile chevy 350 tbi
by dogememe. 12/12/18 12:22 PM
voltage test for coolant condition
by NissanMaxima. 12/12/18 12:17 PM
paying Premiun for the name(infiniti/nissan
)

by 2008wrx. 12/12/18 11:25 AM
POE oil (R-410a)
by WyrTwister. 12/12/18 09:44 AM
Any Volvo Owners, need some help!
by LazyDog. 12/12/18 09:34 AM
Newest Members
jefe_de_estado, CM613, Geardaddies, 01ws666, ariefnrst
66660 Registered Users
Who's Online Now
112 registered members (andyd, Al, 55hambone, 53' Stude, Aichiguy, 14Accent, 18 invisible), 1,860 guests, and 38 spiders.
Key: Admin, Global Mod, Mod
Forum Statistics
Forums67
Topics294,997
Posts4,925,687
Members66,660
Most Online2,553
Oct 27th, 2018
Donate to BITOG
Previous Thread
Next Thread
Print Thread
Hop To
Page 1 of 2 1 2
Contributing to Trad.IRA even if not deductible? #4603259
12/14/17 08:45 AM
12/14/17 08:45 AM
Joined: Oct 2002
Posts: 36,614
Great Lakes
Quattro Pete Offline OP
Quattro Pete  Offline OP
Joined: Oct 2002
Posts: 36,614
Great Lakes
Does it make sense to max out your traditional IRA contribution limit even if you can't deduct it from your tax return?


'02 530i (Edge 0W-40)
'15 Q5 3.0T (Edge 5W-40)
'18 Charger SRT (PUP 0W-40 SRT)
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603263
12/14/17 08:53 AM
12/14/17 08:53 AM
Joined: Jul 2011
Posts: 545
Michigan
Eosyn Offline
Eosyn  Offline
Joined: Jul 2011
Posts: 545
Michigan
If it's a "Traditional IRA," it is tax deductible. Contribution limit per year is $5500, unless you're 55 where you can contribute up to $6500/yr. I don't understand how a Traditional IRA can't be tax deductible, then again I'm not a financial planner/advisor.

Personally, if it was me, if you can't deduct it from your taxes, I'd put my money into a Roth IRA instead, that way you won't get taxed on the gains or the distribution (when the time comes).

Or, better yet, if you have a Health Savings Account (HSA), I'd put money in that. HSA is an awesome place to put tax free money away for retirement medical expenses (Health, dental, vision). Your contribution is tax deductible, gains are not taxed, distribution isn't taxed (as long as it's used for qualified medical expenses like Copays, Coinsurance, deductibles, etc) and you don't lose it at the end of the year, like a flex spending account. Only bad thing is, you have to have a high deductible health plan to qualify to have an HSA.

Last edited by Eosyn; 12/14/17 09:04 AM.

02 Toyota Celica GT: 198k, VML 5W30/Denso filter
05 Toyota Corolla LE: 149k, VML 5W30/Denso filter
15 Chevy Malibu LT: 46k, VML 0W20/Denso filter
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603268
12/14/17 08:58 AM
12/14/17 08:58 AM
Joined: Sep 2004
Posts: 21,927
Orlando, FL
Mr Nice Offline
Mr Nice  Offline
Joined: Sep 2004
Posts: 21,927
Orlando, FL
Originally Posted By: Quattro Pete
Does it make sense to max out your traditional IRA contribution limit even if you can't deduct it from your tax return?

Traditional IRA lowers your taxable income.
Roth IRA doesn't but zero taxes after age 59.5

IRA 'catch up contributions' begins at age 50

Re: Contributing to Trad.IRA even if not deductible? [Re: Mr Nice] #4603286
12/14/17 09:12 AM
12/14/17 09:12 AM
Joined: Oct 2002
Posts: 36,614
Great Lakes
Quattro Pete Offline OP
Quattro Pete  Offline OP
Joined: Oct 2002
Posts: 36,614
Great Lakes
Originally Posted By: Mr Nice
Originally Posted By: Quattro Pete
Does it make sense to max out your traditional IRA contribution limit even if you can't deduct it from your tax return?

Traditional IRA lowers your taxable income.


It doesn't if you already contribute to an employer-sponsored 401K plan and/or if your income is over certain level. That's what I meant when I stated it would not be tax deductible in my case, and hence why I question if it even makes sense to contribute to Traditional IRA in my case.


'02 530i (Edge 0W-40)
'15 Q5 3.0T (Edge 5W-40)
'18 Charger SRT (PUP 0W-40 SRT)
Re: Contributing to Trad.IRA even if not deductible? [Re: Eosyn] #4603291
12/14/17 09:17 AM
12/14/17 09:17 AM
Joined: Oct 2002
Posts: 36,614
Great Lakes
Quattro Pete Offline OP
Quattro Pete  Offline OP
Joined: Oct 2002
Posts: 36,614
Great Lakes
Originally Posted By: Eosyn
If it's a "Traditional IRA," it is tax deductible.

Not if you already participate in an employer 401K plan and/or are at certain income level.

Quote:
I'd put my money into a Roth IRA instead,

Not an option in my case.

Quote:
Or, better yet, if you have a Health Savings Account (HSA), I'd put money in that.

Thanks, but between me and my wife, we are already maxing it out.


'02 530i (Edge 0W-40)
'15 Q5 3.0T (Edge 5W-40)
'18 Charger SRT (PUP 0W-40 SRT)
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603296
12/14/17 09:20 AM
12/14/17 09:20 AM
Joined: Sep 2004
Posts: 21,927
Orlando, FL
Mr Nice Offline
Mr Nice  Offline
Joined: Sep 2004
Posts: 21,927
Orlando, FL
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.



Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603300
12/14/17 09:22 AM
12/14/17 09:22 AM
Joined: Sep 2007
Posts: 1,022
TX, USA
JMJNet Offline
JMJNet  Offline
Joined: Sep 2007
Posts: 1,022
TX, USA
Originally Posted By: Quattro Pete
Does it make sense to max out your traditional IRA contribution limit even if you can't deduct it from your tax return?


Based on the trail of answer above.

No, because either way you are taxed.
In the case of the traditional IRA, you will have to contribute after tax and you will have to pay the tax later when you withdraw the money in that traditional IRA.

Just put it in your regular investment account and you can use it anytime, just in case.


  • 2017 Toyota Sienna
  • 1995 GMC Suburban 6.5L Turbo Diesel


Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603320
12/14/17 09:53 AM
12/14/17 09:53 AM
Joined: Oct 2010
Posts: 9,123
Virginia Beach
Astro14 Online content
Astro14  Online Content
Joined: Oct 2010
Posts: 9,123
Virginia Beach
Originally Posted By: Quattro Pete
Originally Posted By: Eosyn
If it's a "Traditional IRA," it is tax deductible.

Not if you already participate in an employer 401K plan and/or are at certain income level.

Quote:
I'd put my money into a Roth IRA instead,

Not an option in my case.

Quote:
Or, better yet, if you have a Health Savings Account (HSA), I'd put money in that.

Thanks, but between me and my wife, we are already maxing it out.


We are in exactly your position, and make non-deductible contributions to our IRAs. The basic principle: we are in our highest tax bracket now, so avoid paying taxes on the gains (we already paid taxes on the contribution) until we are in a lower tax bracket.

Keep track of your non-deductible contributions as they form the non-taxable basis when you take the money out. You’ll only pay tax on the gain.


32 Packard 15W40
02 Volvo V70 T5 0W40 M1
02 Volvo V70 XC 0W40 Edge
05 MB S600 0W40 M1
16 Tundra 1794 5W30 Pennzoil Ultra
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603330
12/14/17 09:59 AM
12/14/17 09:59 AM
Joined: Nov 2008
Posts: 1,039
Las Vegas
ArrestMeRedZ Offline
ArrestMeRedZ  Offline
Joined: Nov 2008
Posts: 1,039
Las Vegas
Depends. Subject to conditions, if you put after tax money in an IRA, you can roll that money over into a Roth IRA without having to pay tax on it again. You can do this even if you make too much to contribute to a Roth IRA.

This part you will have to confirm, but what may limit your use of this is when you roll over from ordinary to Roth, you can't choose to roll the after tax money only - you roll the percentage it is of the total. For instance, if your ordinary IRA of $10k is made up of $8k normal, and $2k after tax money, and you roll $2k into a Roth (20% of the account), the IRS considers $400 of the rollover to be from the after tax money, and that portion of the rollover event to be non taxable. In this case, you would have to pay tax on $1600 of the rollover. It is a loophole that allows you to fund a Roth, even if you make too much to make normal contributions.
One statement that was incorrect is that you would have to pay tax on after tax contributions withdrawn from your IRA. You would have to pay tax on it's gains (hence the value of a Roth rollover), but not on a withdrawal of after tax money by itself. Of course you would have to keep good records for a long time.

Re: Contributing to Trad.IRA even if not deductible? [Re: ArrestMeRedZ] #4603341
12/14/17 10:12 AM
12/14/17 10:12 AM
Joined: Oct 2010
Posts: 9,123
Virginia Beach
Astro14 Online content
Astro14  Online Content
Joined: Oct 2010
Posts: 9,123
Virginia Beach
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...


32 Packard 15W40
02 Volvo V70 T5 0W40 M1
02 Volvo V70 XC 0W40 Edge
05 MB S600 0W40 M1
16 Tundra 1794 5W30 Pennzoil Ultra
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603346
12/14/17 10:15 AM
12/14/17 10:15 AM
Joined: Dec 2004
Posts: 2,564
Chicago Area
opus1 Offline
opus1  Offline
Joined: Dec 2004
Posts: 2,564
Chicago Area
Short answer: no.

I don't want to deal with the paperwork/tracking of what's taxable and what isn't come withdrawal time. I'm a lazy, lazy, man.

I am, however, taking advantage of the "catch-up" provisions in my 401k and Roth IRA.


Current Fleet:

2010 Hyundai Sonata GLS
2009 Chevy Cobalt SS Sedan (yes,the turbo)
2002 Dodge Dakota SXT Club Cab
1994 Ford Ranger XLT (RIP, Dad)
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603347
12/14/17 10:16 AM
12/14/17 10:16 AM
Joined: May 2016
Posts: 293
New England
NibbanaBanana Offline
NibbanaBanana  Offline
Joined: May 2016
Posts: 293
New England
A Vanguard deferred variable annuity. Very cheap. Tax deferred gains.


1993 Ford E350 5.8L, 68K
2002 Ford E150 4.2L, 85K
2006 Chevy Aveo 1.6L 215K
2013 Kia Reo 1.4L, 101K
7500 OCI, M1 5-30 winter, M1 10-30 summer
Re: Contributing to Trad.IRA even if not deductible? [Re: JMJNet] #4603380
12/14/17 10:35 AM
12/14/17 10:35 AM
Joined: Jul 2011
Posts: 545
Michigan
Eosyn Offline
Eosyn  Offline
Joined: Jul 2011
Posts: 545
Michigan
Originally Posted By: JMJNet
Originally Posted By: Quattro Pete
Does it make sense to max out your traditional IRA contribution limit even if you can't deduct it from your tax return?


Based on the trail of answer above.

No, because either way you are taxed.
In the case of the traditional IRA, you will have to contribute after tax and you will have to pay the tax later when you withdraw the money in that traditional IRA.

Just put it in your regular investment account and you can use it anytime, just in case.


+1.


02 Toyota Celica GT: 198k, VML 5W30/Denso filter
05 Toyota Corolla LE: 149k, VML 5W30/Denso filter
15 Chevy Malibu LT: 46k, VML 0W20/Denso filter
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603389
12/14/17 10:39 AM
12/14/17 10:39 AM
Joined: Dec 2008
Posts: 2,407
CA
raytseng Offline
raytseng  Offline
Joined: Dec 2008
Posts: 2,407
CA
It really depends on your total portfolio and other opportunities.

If you are at the stage where you have such a high income where the ira contribution doesnt have tax benefits; this implies you should already have some large investment portfolios and lots of money to invest.

I will also assume your current ira portfolio balance should be large if youve been at this a while. So for example if the contribution would be less than 1% of your current portfoliobalance, and you have an additionall 40k to deposit to your regular account, its not even worth your time to do that small 5.5k sliver even if it had tax benefits. The daily ups and downs moves the balance more than the tax benefits of the 5.5k.
It has effectively no effect on your financial status or portfolio as it becomes lost in a hundreth of decimal point of gain.

As far as the cap gains, it is such a small amount that you could buy and hold an index and the cap gains would not be a factor until you sell. This assumes your that the bulk of your trading and investing would be unaffected by 5.5 stashed in an index or mutualfund when your typical trade is in $100k blocks of other shares.

Besides the avoidance of hassle, you are kept more flexible and more liquid or consolidated with other funds so you have options for other investment opportunities, thr most obvious being real estate. If you have opportunities for more shady stuff, i mean higher risk opportunities, it will be harder to do those with ira money.

Last edited by raytseng; 12/14/17 10:47 AM.
Re: Contributing to Trad.IRA even if not deductible? [Re: Quattro Pete] #4603398
12/14/17 10:50 AM
12/14/17 10:50 AM
Joined: Jul 2013
Posts: 2,283
Outer Banks, NC
NormanBuntz Online content
NormanBuntz  Online Content
Joined: Jul 2013
Posts: 2,283
Outer Banks, NC
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.


2017 Honda Odyssey SE, 16K
2013 Honda Accord LX, 58K
2007 Honda Ridgeline RTS, 88K
2007 Infiniti M35, 107K
Page 1 of 2 1 2

BOB IS THE OIL GUY® Powered by UBB.threads™