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
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.