When It’s Bad to Contribute to an IRA
The Money Girl post that I wrote this week, “Should You Contribute to Both a 401(k) and an IRA?“, tells you about a little twist in the IRA rules that can reduce or eliminate the tax benefit of a traditional IRA when you or your spouse are covered by a retirement plan at work.
Find out the income thresholds for each tax filing status where this limitation on deductions applies. If you won’t get a tax deduction for your traditional IRA deductions, consider making a Roth IRA contribution instead, or maxing out your retirement plan at work. That’s because having a non-deductible traditional IRA contribution isn’t the best way to save for retirement.
Subscribe to the Money Girl audio podcast on iTunes so you never miss an episode!