Why Invest in a Non-Deductible Traditional IRA?
Qualified retirement accounts are a great way to invest for your retirement. In all cases, the money you invest in those types of plans can grow tax-deferred while it is in the plan. In addition, in some cases, you get a deduction for contributing to the plan while in others, you can take qualifying withdrawals completely tax free in retirement.
In one type of plan, however, the non-deductible Traditional IRA, you get neither a tax deduction for contributing nor the ability to take tax free qualifying withdrawals. To make matters worse, when you withdraw money from that type of plan, your gains are taxed as ordinary income, removing the benefits of long-term capital gains tax rates in standard brokerage accounts. That raises a key question: Why invest in a non-deductible Traditional IRA at all?
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Source Fool.com
