Traditional IRA Investment advice

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Topic Author
dskillz1
Posts: 148
Joined: Sat Feb 07, 2015 9:41 pm

Traditional IRA Investment advice

Post by dskillz1 »

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%
JW-Retired
Posts: 7189
Joined: Sun Dec 16, 2007 11:25 am

Re: Traditional IRA Investment advice

Post by JW-Retired »

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
Retired at Last
Topic Author
dskillz1
Posts: 148
Joined: Sat Feb 07, 2015 9:41 pm

Re: Traditional IRA Investment advice

Post by dskillz1 »

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
rkhusky
Posts: 17654
Joined: Thu Aug 18, 2011 8:09 pm

Re: Traditional IRA Investment advice

Post by rkhusky »

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.
JW-Retired
Posts: 7189
Joined: Sun Dec 16, 2007 11:25 am

Re: Traditional IRA Investment advice

Post by JW-Retired »

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
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.

Sorry, I misunderstood your original post....... you calling this a "non-deductible IRA" threw me.
JW
Retired at Last
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