What is a Nondeductible IRA contribution?
A nondeductible IRA contribution is a deposit to a traditional IRA made with after-tax dollars when income exceeds the deductible phase-out range or a workplace plan fully disqualifies the deduction. No immediate deduction applies, but funds still grow tax-deferred until withdrawal. The after-tax amount is tracked as IRA basis using IRS Form 8606, which prevents double taxation on future distributions. Taxpayers unable to deduct often convert to a Roth IRA via the backdoor Roth strategy. Contributing to a Traditional 401k plan each year may lower MAGI enough to restore deductibility over time.
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