Have you heard of the “non-deductible” IRA? I’m not referring to the ROTH IRA, but a traditional IRA that many people are stuck with as their only option (for various reasons that make investing in other types of IRAs unavailable).
In those cases, the IRS allows you to contribute to a traditional IRA, but NOT take a tax deduction for it.
You still get tax-deferred growth, but during retirement your earnings (interest and capital gains) will be taxed, but not the contribution amounts.
Did you know that Congress has enacted a new law to encourage everyone to convert their traditional IRAs (whether deducted or not) into ROTH IRAs during the year 2010.
High income earners ($99,000-$114,000) filing as a single in 2007 and ($156,000-$166,000) for joint tax returns cannot fully fund a ROTH IRA. Those with Modified Adjusted Incomes of more cannot fund a ROTH at all!
You may remember that with ROTH IRAs, there is no tax deduction — but the flip side is that when you take out the money properly… you don’t pay income taxes! But I encourage everyone that qualifies for a ROTH IRA to contribute to one — especially...
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