I currently have a traditional IRA with Vanguard that I cannot contribute to with pre-tax money basically making it a non-deductible IRA. My plan is to never contribute any after tax money to it and instead only contribute pre-tax rollover money from my 401K to it on an annual basis. I am allowed to do an in-service rollover with no tax penalties at all. Am I right in saying that because of this I will never have to keep track of 8606 tax forms if all I do are the rollovers?
My current investments in this IRA are based on the CoffeeHouse portfolio as shown below. I have done my research on this portfolio and am comfortable with it but im just not sure if this portfolio is appropriate for a non deductible IRA. I currently have over 100K invested. What do you think?
VNQ VANGUARD REIT INDEX ETF 10%
VB VANGUARD SMALL CAP ETF 10%
VBR VANGUARD SMALL CAP VALUE ETF 10%
BND VANGUARD TOTAL BOND MARKET ETF 40%
VXUS VANGUARD TOTAL INTL STOCK INDEX FUND ETF 10%
VTI VANGUARD TOTAL STOCK MARKET ETF 10%
VTV VANGUARD VALUE ETF 10%
Traditional IRA Investment advice
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Re: Traditional IRA Investment advice
This IRA is not a "non-deductible IRA" as there is no such thing. It's a ordinary traditional IRA that may or may not contain some non-deductible contribution money. Even if the entirety of all contributions have been non-deductible all their subsequent earnings will still be taxed when withdrawals are made. The non-deductible "basis" (the sum of all the non-deducible contributions made less any pro-rata amounts taken out) has to be tracked from year to year in Form 8606. No getting around that.
JW
JW
Retired at Last
Re: Traditional IRA Investment advice
But since this account does not have any non-deductible contributions in it and only my 401k in-service rollover which was all pre-tax do I still need to maintain 8606 forms? I never plan to contribute any non-deductible earnings ever.
Thanks
Thanks
Re: Traditional IRA Investment advice
If you plan to pay taxes on all withdrawals from the IRA, I don't see a need to maintain 8606's, or even fill out an 8606.
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- Posts: 7189
- Joined: Sun Dec 16, 2007 11:25 am
Re: Traditional IRA Investment advice
Agree, no 8606 forms needed unless/until a non-deductible contribution is put in. If that never happens then everything that comes out is taxable.dskillz1 wrote: But since this account does not have any non-deductible contributions in it and only my 401k in-service rollover which was all pre-tax do I still need to maintain 8606 forms? I never plan to contribute any non-deductible earnings ever.
Thanks
Sorry, I misunderstood your original post....... you calling this a "non-deductible IRA" threw me.
JW
Retired at Last