Non-deductible IRA

[LivingAlmostLarge]

I just thought this was a nice article showing it could be worthwhile investing in non-deductible IRA if you are over the Roth IRA income limits.

http://www.bankrate.com/brm/itax/tax...le_IRAs_a1.asp

[jIM_Ohio]

Originally Posted by LivingAlmostLarge

I just thought this was a nice article showing it could be worthwhile investing in non-deductible IRA if you are over the Roth IRA income limits.

http://www.bankrate.com/brm/itax/tax...le_IRAs_a1.asp

The context of the article was to contribute to deductable and convert to a Roth in 2010 when conversion limits are removed (I got hit with this earlier in 2006/ 2007 tax time). I converted thinking coversion limits were same as income limits (WRONG) conversion limits for married filing jointly are 95k or 105k, and we exceeded that (BARELY). So I need to wait to 2010 for the conversion.

I agree with the articles premise.

Generally speaking, from a tax perspective, if someone is over Roth limits, taxes would be minimized using tax efficient MF in taxable accounts. If Roth conversion is allowed, then it takes precedence over taxable accounts. But taxable accounts take precendence over traditional IRA.

Captial gains and dividends are taxed at 15%, where as income tax rates for people making more than 150k are 28%, 33% and 35%.