While many folks would tell you that it can be a good idea to make non-deductible contributions to your traditional IRA, I believe it’s in the “Bad Idea” category for most situations. This is primarily due to the way the tax law works for IRA and non-IRA money. There can be good reasons for non-deductible IRA contributions, but today we’ll focus on the downside.
As you may be aware, distributions from your IRA are generally subject to ordinary income taxation. Of course, your non-deductible contributions are not taxed, but any growth in your account and any deductible contributions will be taxed at the ordinary income tax rate.
And since non-deductible contributions (typically) make up a small amount of your total IRA balance when it comes time to withdraw the money, there is little benefit to be