UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: brwhiz Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Re: Hurray For Me!!! (And New Qustions) Date: 5/24/2002 10:59 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
So this year you can contribute $11,000 to your 401(k),$3000 to your Roth, and $3,000 to the non-deductible IRA for a total of $17,000.

I don't think Uncle Sap will like that!

Uncle Slam may not LIKE it, but the IRS says that it is perfectly LEGAL and you will suffer NO tax consequences. The key point is that the contributions to the non-deductible IRA are made with AFTER-TAX dollars, which you can't deduct from your taxable income. But the proceeds from this IRA are tax deferred until distributed, so you get the benefit of compounding on the proceeds (which have not been reduced by any taxation). And after age 59 1/2 you have a nice bundle of money on which the taxes have already been paid (your contributions) and that can be withdrawn without impacting your tax bracket or costing you one additional cent of tax. It is only after you have withdrawn ALL of your contributions and start taking distributions on the earnings that your taxable income is then increased.

Be aware that contributions to both of these type of IRA's become restricted or prohibited if your income is above certain levels (something around $90,000 for singles and $160,000 for joint filers).
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Value Hounds

Mylan Transitioning from Generics
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement