NinjaPigeon
Recycles dryer sheets
- Joined
- Jan 8, 2006
- Messages
- 331
Is it worth funding a traditional IRA if you don't get the deductions? The reason I'm asking is because
-I contribute max % per paycheck to my 401k
-I'm not eligible for a Roth this year
-I already put after-tax money into a brokerage account with Vanguard
The main benefit I see that's making me consider funding the IRA is that it'll be tax deferred. That allows me to get more money invested early, which over my 30 year investment horizon means more on the backend due to compounding, even if I'm in the same tax bracket.
On the other hand, I already contribute after tax to my brokerage accounts, which I can tap into at any time without paying a federal penalty. Also, I read about the rules for converting an IRA to a Roth, and even though I'd have paid all tax on that IRA prior to a conversion, I'd end up owing more tax because they look at the total value of all IRA accounts to determine tax at conversion. (I can't remember the link I read this on, but they gave an example and used a funny word to describe how the government justifies this sneaky taxing of already taxed money)
-I contribute max % per paycheck to my 401k
-I'm not eligible for a Roth this year
-I already put after-tax money into a brokerage account with Vanguard
The main benefit I see that's making me consider funding the IRA is that it'll be tax deferred. That allows me to get more money invested early, which over my 30 year investment horizon means more on the backend due to compounding, even if I'm in the same tax bracket.
On the other hand, I already contribute after tax to my brokerage accounts, which I can tap into at any time without paying a federal penalty. Also, I read about the rules for converting an IRA to a Roth, and even though I'd have paid all tax on that IRA prior to a conversion, I'd end up owing more tax because they look at the total value of all IRA accounts to determine tax at conversion. (I can't remember the link I read this on, but they gave an example and used a funny word to describe how the government justifies this sneaky taxing of already taxed money)