No. of Recommendations: 3
RatioFool writes,

I'm a little surprised that some people actually made non-deductible contributions to a traditional IRA. I couldn't find a compelling reason to do so.

It made sense during the Reagan years for a short period when dividends and capital gains were taxed the same as W-2 income.



Back when I worked for a Fortune 200, I maxed out the 401k contribution every year. They matched the first six % but I was putting I think 16% in. Usually that meant sometime in October I would hit the max dollar limit for pre-tax 401k contributions. Payroll would send you a form to elect stopping contributions for the remainder of the year or continuing but using after tax dollars.

I always elected to keep adding after tax money for the last 4 or 5 pay periods each year. So when I left the company and rolled the 401k to a self directed IRA, these after tax dollars traveled to the rollover IRA. So like the OP stated, I lament form 8606 and having some of my after tax dollars locked in until the IRA is exhausted.

On a more disturbing topic, I noted this years form 8606 has a place for you to report the basis for your Roth IRA. This is new. The section of the 8606 only kicks in if you make a Roth withdrawal (not me) but it looks like when you do, you have to compute and report the Roth basis to Uncle Sugar. Now what's that all about if Roth withdrawals are supposed to be tax free? Why would basis matter? I suspect the revenue camel is sticking his nose under the tent.
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