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.
References in periodicals archive ?
However, as long as Carol was under age 70V2 by the end of 2018, she can make a full nondeductible contribution to a traditional IRA.
Dunn argued that his 2008 nondeductible contribution was an excess contribution eligible to be carried forward to 2009 and deducted on the 2009 return (when he was no longer an active participant in an employer retirement plan).
* An economic stimulus payment or tax refund that was directly deposited into a traditional IRA as a nondeductible contribution.
If an individual makes a nondeductible contribution to a traditional IRA for any year, he must report on Form 8606 (a) the amount of the nondeductible contributions for the taxable year, (b) the amount of distributions from individual retirement plans for the taxable year, (c) the excess of the aggregate amount of nondeductible contributions for all preceding years over the aggregate amount of distributions that were excludable from income for such taxable years, (d) the aggregate balance of all individual retirement plans as of the close of the year in which the taxable year begins, and (e) any other information as prescribed by the Secretary of the Treasury.
A Coverdell Education Savings Account, with a nondeductible contribution limit of $2,000 a year, also helps you save for college, with earnings growing tax free.
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.
Thus, a volunteer's charity work is a nondeductible contribution of personal services (Taylor, T.C.
Those not eligible can still make a nondeductible contribution in 2009.
For 2012, he makes a $6,000 nondeductible contribution to his first traditional IRA.
In 2010 the maximum nondeductible contribution is limited to the lesser of 100 percent of compensation or $5,000 ($10,000 for husband and wife), subject to a phaseout for taxpayers filing jointly with adjusted gross incomes between $167,000 and $177,000 (phaseout for single taxpayers is between $105,000 and $120,000).
For instance, Friedman -- who used to be a tax lawyer with Covington & Burling in Washington -- says that an investor with a Roth IRA should consider this year making a nondeductible contribution to an IRA and rolling that contribution over to the Roth account without tax, in case Congress eliminates that option in 2016.