Do you basically get double taxed if you make non deductable contributions to a traditional ira? Why do it? (endlesstalk.org)

submitted 1 year ago by aredditimmigrant@endlesstalk.org to c/personalfinance@lemmy.ml

6 comments fedilink hide all child comments

In the US, if you make a lot, are covered by a work retirement account or you contribute to a Roth, you can't deduct traditional ira contributions right?

So that money gets added to the rest of your traditional ira monies right? and then when you hit retirement age, you have to pay income level taxes on deductions on that already post tax money right?

Why get taxed twice? What's the benefit? +Not being able to touch it til retirement age.

you are viewing a single comment's thread
view the rest of the comments

[-] xp19375@sh.itjust.works 8 points 1 year ago

The only reason to use a Traditional IRA and not a normal brokerage account is so you can backdoor it into a Roth IRA. Since you can't make Roth IRA contributions when you are above a certain income limit, but you can roll over a Traditional IRA into a Roth IRA, this let's you avoid taxes on the growth of the account.

[-] specialdealer@lemm.ee 4 points 1 year ago

This is the real answer to the question given the nuance in the question of “if you make a lot”

this post was submitted on 28 Oct 2023

17 points (100.0% liked)

Personal Finance

3868 readers

36 users here now

Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!

Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)

founded 2 years ago

MODERATORS

WandererLagomorph799@lemmy.ml

nieceandtows@programming.dev

nieceandtows@lemmy.ml