No. of Recommendations: 1
Well I'm in the un/enviable position of not being eligible for either the Roth or traditional IRA's due to income restrictions. I have already maxed out my tax deferred plans at work and am in a position to put away more money. My question is, am I better off putting the extra into a nondeductible IRA or in an after tax retail account. Although I would like the ability to have access to the money sooner, I should be able to wait for it until retirement. I'm not sure that the nondeductible IRA is truly a tax advantage. The way I see it, if I put the money in a low turnover/fee index mutual fund the advantage of tax-free compounding is not as great as it may seem. Then when I withdraw it, the earnings on the IRA will be taxed as income as apposed to the (I think considerably lower)ultra long-term capital gains rate. Do I have the details correct? If not please correct me, if I am correct do you think a nondeductible IRA may be a tax disadvantage as well as loss of control and possible penalties (early withdrawal) for me. Sorry for the long question.

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