Good question, My02. You are right on top of things.The advantage of the traditional non-deductible IRA is that your money is allowed to grow tax free until distribution in retirement. That means you are not stuck paying taxes on interest and dividends or capital gains on trades. So you can trade stocks or investments at will without worrying about the tax consequences.Many believe that a taxable account where you invest in the long term buy and hold style is preferable because if you do it right you are taxed at capital gains rates and then only when you sell. Plus you have easy access to the money if other needs or opportunities come up.However, many find that finding investments you can truely hold long term is a problem. Imagine the difficulty of those who hesitated to sell and take profits during a market crash to avoid the tax bill. So they waited and lost all their profits.I think you will decide the IRA is worth it anyway. But you will want to max your pretax 401K plan contributions first. After tax 401K and non-ductible IRA are similar in advantage, but self directed IRA account at a discount broker gives you more investment choices. The smallish contribution limit on IRAs makes them kind of a yawner for many. Its tough to accumulate significant amounts in an IRA. The higher limits of the 401K make them more of a contributor to retirement, and then to rollover IRAs and Roth conversions.
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