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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75802  
Subject: Re: not eligible for roth Date: 5/6/1999 8:18 PM
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aq67sceb wrote,

Or if you are unable to make a contribution to a traditional IRA and are left with the choice of a
non-deductable IRA or a Roth IRA.

In that case it is a no-brainer.


I agree.

Also, if you're not eligible for a Roth, there may be some advantages to forgoing a non-deductible IRA and just investing for retirement in a taxable account.

If you're a LTB&H investor with mostly stocks in your retirement portfolio an IRA may actually reduce your after tax return. You pay ordinary income tax on your IRA gains (max=39.6%) whereas capital gains in a taxable account are taxed at a maximum of 20%. Of course, this only works if you keep your trading to an absolute minimum.

It also avoids all the IRA restrictions regarding early withdrawals and minimum distributions after age 70 1/2.

intercst
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