No matter how much money you make, you're
eligible to open a non-deductible
IRA
— although the annual
contribution cap still applies. You'll get the benefit of
tax-deferred
earnings, but you contribute after-tax dollars. If you're not
eligible for other IRA plans, or if you've already maxed out contributions
to a 401(k) or other employer-sponsored plan, non-deductible IRAs
are worth considering. You have to begin withdrawing when you
turn 70 1/2, and you can't take the money out until you turn 59
1/2, except for qualified expenses.
While deductible and Roth IRAs offer additional
tax advantages that make them more appealing, a non-deductible
IRA is still a good bet for anyone who wants to invest as much
as they can for retirement.
It's easy to open an IRA. The plans are offered by almost all financial institutions, including banks, brokerage firms, and mutual fund companies. Once you've chosen an IRA provider that will allow you to make the kinds of investments you're interested in, all you have to do is fill out the paperwork and start making deposits. You have until April 15 to make a contribution for the previous year. But it may be easier to make smaller, regular payments throughout the year.
