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Why Not to Invest In Non-Deductible IRAs

People who are too wealthy to qualify for either a deductible individual retirement account (IRA) or a Roth IRA have the option of contributing to a non-deductible IRA. Assuming they meet the basic criteria to contribute to an IRA,1 they can deposit up to $4,000 a year but are not entitled to claim an income tax deduction. Roughly one-fourth of all contributions to traditional IRAs are non-deductible.2

People who are too wealthy to qualify for either a deductible individual retirement account (IRA) or a Roth IRA have the option of contributing to a non-deductible IRA. Assuming they meet the basic criteria to contribute to an IRA,1 they can deposit up to $4,000 a year but are not entitled to claim an income tax deduction. Roughly one-fourth of all contributions to traditional IRAs are non-deductible.2

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