Non-Deductible IRA Contributions

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ubermax
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Location: Connecticut

Non-Deductible IRA Contributions

Post by ubermax »

Currently it's my understanding that you can make non-deductible IRA contributions by choice or if you're not eligible to make deductible contributions - two questions :
1. In the past , maybe late 70's early 80's were non-deductible IRA contributions the only option or has there always been a choice provided the employer plan
and/or compensation limitations don't come into play.
2. would Vanguard keep historical IRA withdrawal information ?

thanks in advance to those with good long term memory who respond :happy
dickenjb
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Location: Philadelphia PA

Re: Non-Deductible IRA Contributions

Post by dickenjb »

My recollection was around the time I took my first real job in 1981:

1) The limit was $2000
2) The contribution was deductible for everyone - the income limits were added later in an effort to target the high income folk
3) I know Vanguard keeps records going back 10 years online - another possibility is I think you can pay the IRS to provide copies of old tax returns which would have records of IRA withdrawals
Billionaire
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Re: Non-Deductible IRA Contributions

Post by Billionaire »

I just recently googled this topic. They were available in the mid 70's. I made my first IRA contribution in 1981 and was curious to review when the deductibility started changing. I think the most worthwhile google results were on of all places Wikipedia, where there was some sort of history of the IRA.
Last edited by Billionaire on Fri Feb 21, 2014 8:20 am, edited 1 time in total.
sscritic
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Re: Non-Deductible IRA Contributions

Post by sscritic »

I like old tax return instructions.

In 1980, you were limited to the smaller of $1500 and 15% of your wages (see page 10, line 25 instructions).
http://www.irs.gov/pub/irs-prior/i1040--1980.pdf
sscritic
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Re: Non-Deductible IRA Contributions

Post by sscritic »

By 1984, the instructions said not to use the simple worksheet if you made DECs to a qualified employer plan. [I threw in the DEC for the people who don't like abbreviations.] You use pub 590 instead.

I will let someone else check the intervening years (1040 instructions and pub 590).

P.S. deductible employee contributions
sscritic
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Re: Non-Deductible IRA Contributions

Post by sscritic »

Only slightly off-topic: Did anyone else notice this?
Note. After 2013, Publication 590 will be split into two separate publications as follows.

Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. This publication will include the rules for rollover and conversion contributions.

Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. This publication will include the rules for required minimum distributions and IRA beneficiaries.
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House Blend
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Re: Non-Deductible IRA Contributions

Post by House Blend »

I think 1987 was the first year when there were eligibility tests for deducting IRA contributions. Prior to that all IRA contributions were deductible.
Topic Author
ubermax
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Location: Connecticut

Re: Non-Deductible IRA Contributions

Post by ubermax »

Part of the reason for the question was that I have a copy of my 1996 Form 8606 which is titled "Nondeductible IRAs (Contributions, Distributions, and Basis)" ; I used this Form because I withdrew from my IRA and the Form goes through a calculation to determine the taxable & nontaxable portion given the existing IRA basis - which implies that the basis was derived from after tax nondeductible IRA contributions in the past.

I just can't imagine why I would have made nondeductible contributions if deductible was an option ??

I'll have to spend more time and go through some of the great responses .
kaneohe
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Re: Non-Deductible IRA Contributions

Post by kaneohe »

House Blend wrote:I think 1987 was the first year when there were eligibility tests for deducting IRA contributions. Prior to that all IRA contributions were deductible.
I agree w/ House Blend. I used to try to keep a pedigree of IRA contributions and where they were moved to. The chart shows regular contributions until 1987 when they stopped for many years because they had become non-deductible because I had a company retirement plan.......I don't recall if there were income limits to deductibility at that time or whether just the fact of having a company retirement plan was enough to disqualify the deduction.
sscritic
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Re: Non-Deductible IRA Contributions

Post by sscritic »

PUBLIC LAW 99-514 OCT. 22, 1986
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.-This Act may be cited as the "Tax Reform Act of 1986".
SEC. 151. EFFECTIVE DATES.
(a) GENERAL RULE.-Except as otherwise provided in this section, the amendments made by this title shall apply to taxable years beginning after December 31, 1986.
SEC. 1101. LIMITATIONS ON IRA DEDUCTIONS FOR ACTIVE PARTICIPANTS IN CERTAIN PENSION PLANS.
(a) LIMITATIONS ON DEDUCTIONS FOR ACTIVE PARTICIPANTS.-
(1) IN GENERAL.-Section 219 (relating to deduction for retirement savings) is amended by redesignating subsection (g) as
subsection (h) and by adding after subsection (f) the following new subsection:
"(g) LIMITATION ON DEDUCTION FOR ACTIVE PARTICIPANTS IN CERTAIN PENSION PLANS.-
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