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Nondeductible Contribution
(redirected from Nondeductible Contributions)

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Nondeductible contribution
A contribution to either a traditional IRA or Roth IRA. Income tax is due on the contribution in the tax year for which the contribution is made.
Nondeductible Contribution
A contribution to a retirement plan where the amount is taxable. For example, if one makes $2,000 in nondeductible contributions, one must still pay taxes on that $2,000 even though it was placed in a retirement plan. Nonqualifying plans usually have nondeductible contributions. Likewise, a Roth IRA takes nondeductible contributions, but this is because withdrawals following retirement are tax free.
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For example, if you convert a $100,000 traditional IRA to a Roth and you made $10,000 in nondeductible contributions, 10% of the converted amount would be tax-free.
Don't Pay Taxes Twice by Cameron Huddleston, Contributing Editor, Kiplinger.com / Kiplinger.com
A client who has only made nondeductible contributions to a sole IRA can convert it to a Roth IRA and pay no taxes on the conversion of earnings.
Roth IRA conversion quiz: are you up to speed? by Bourdon, Jean-Luc / Journal of Accountancy
So if you've maxed out your 401(k) or 403(b) contributions and don't qualify to make Roth IRA contributions because of your income level, you still can make nondeductible contributions to a traditional IRA in 2009 and 2010 and then convert it to a Roth IRA in 2010.
Shut out from Roth IRAs no longer by Sommese, Donald E. / New Hampshire Business Review
 
 
 
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