Nondeductible contribution

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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First, Cheryl would make a $5,000 nondeductible contribution to her traditional IRA.
1, 1998, an individual who meets the income limitations can make an annual nondeductible contribution to a Roth IRA up to the excess of the lesser of $5,000 currently or 100 percent of the individual's earned income, minus the aggregate amount of contributions for the tax year to all other individual retirement plans (other than Roth IRAs or employer contributions to Simplified Employee Pension and Simple IRAs) maintained for the benefit of that individual.
For example, if an intercompany transaction is challenged by the taxing authority on the basis that a payment is considered a nondeductible contribution to capital and the enterprise's position that the payment is fully deductible does not satisfy the probable threshold for initial recognition, no benefit would be realized.
If you are not eligible to make a tax deductible IRA contribution, you can make a nondeductible contribution and enjoy tax-deferred earnings.
The nondeductible contribution amount is still limited to the lesser of your earned income or the IRA contribution limit ($4,000 for 2005).
Thus, a volunteer's charity work is a nondeductible contribution of personal services (Taylor, T.
Those not eligible can still make a nondeductible contribution in 2009.
After 1997, an individual can make an annual nondeductible contribution to a Roth IRA equal to the lesser of $2,000 or 100% of his or her compensation, minus any contributions for me tax year to an other non-Roth IRAs.
Making a nondeductible contribution for 2006 by April 15, 2007, up to de maximum of $4,000 per taxpayer ($5,000 for those 50 or older), enables u taxpayer to roll over such amounts to a Roth IRA in 2010.
The maximum nondeductible contribution is reduced by the amount of deductible contributions for which the taxpayer qualifies.
For Roth IRAs the taxpayer may elect to withdraw the nondeductible contribution tax free (and therefore penalty free).
To do this, the corrected nondeductible contribution amount should be added to Form 8606, Non-deductible IRA Contributions, IRA Basis and Nontaxable IRA Distributions, and attached to form 1040X.