Non deductable tIRA contribution rules

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Jack FFR1846
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Non deductable tIRA contribution rules

Post by Jack FFR1846 » Tue Dec 09, 2014 10:26 am

I have read the wiki and irs pubs and have only figured out that if I can make a contribution, I would use form 8606 to report this.

Here is my situation: I have a son in college who is doing extremely well. He has figured out that he is far more serious and dilligent than his classmates and is considering transferring next year to a much more focused (better) school. Since he currently has a 4 year merit scholarship, if we assume zero aid, the cos will jump from about $30k a year to $60k a year. We have put money into iBonds for many years and that is a fafsa problem for us. $350k in savings bonds is great for liquidity and guaranteed interest, but it kills our chances for aid.

Looking constantly at ways to convert this money into retirement accounts, I contribute $23k to my 401k and $6500 to a roth and my sahm wife puts $6500 into a tIra

I ran across the possibility to put non deductable money into a tIRA but don't know if I qualify or what the limits are. My goal would be to convert my iBonds into tIRA contributions. The money then is retirement account money instead of a countable asset. I do understand that the interest collected on the bond sale will increase my income and that I would pay tax on that.

Any help understanding this would be appreciated.
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NightFall
Posts: 269
Joined: Wed Mar 12, 2014 4:38 pm

Re: Non deductable tIRA contribution rules

Post by NightFall » Tue Dec 09, 2014 10:33 am

My understanding is that the non-deductible contribution, deductible contribution, and ROTH contribution are subject to a total limit of $5500 (or in your case $6500). The non-deductible contribution is really only useful if you exceed the ROTH contribution income limits in my opinion.

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