Greetings all,
A colleague told me that he trades most of his stocks in a traditional IRA. He is not eligible for the tax deductions but he still places tens of thousands of dollars into it every year. He explained that this is because the interest etc is tax free until withdrawal.
Does this sound correct? Excuse my ignorance but I thought that you cannot put more than $2,000 dollars per year into an IRA regardless of whether it can be deductible or not.
Could somebody please explain?

Jake

Greetings, Jake, and welcome. You asked:

<<A colleague told me that he trades most of his stocks in a traditional IRA. He is not eligible for the tax deductions but he still places tens of thousands of dollars into it every year. He explained that this is because the interest etc is tax free until withdrawal.
Does this sound correct? Excuse my ignorance but I thought that you cannot put more than $2,000 dollars per year into an IRA regardless of whether it can be deductible or not.
Could somebody please explain?>>

For full details, see our IRA area at http://www.fool.com/Money/AllAboutIRAs/AllAboutIRAs.htm. In general, you cannot contribute more than $2K per year to an IRA; however, the self-employed may establish a SEP-IRA that allows them to contribute much more. If your friend is contributing more than the $2K, then he must be self-employed. OTOH, he may just be stretching the facts somewhat. However, he is correct that any earnings on his contributions remain untaxed until they are withdrawn in retirement.

Regards..Pixy