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nondeductible IRA contributionsCNBC
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89% Informative
Investors with high incomes may not be able to contribute to a Roth or make deductible contributions to a traditional individual retirement account.
However, a strategy called the "backdoor Roth IRA" lets high earners access Roth accounts.
Investors would contribute to nondeductible IRA, then quickly convert it to Roth account.
Roth IRAs are especially attractive to investors due to features like tax-free investment growth and withdrawals in retirement.
Without a backdoor Roth in play, most investors would be better suited by saving in a taxable brokerage account.
That's because investors using the former will likely end up paying less in tax on their profits over the long term.
Taxable brokerage accounts "are probably better in most aspects" than nondeductible IRAs.
VR Score
93
Informative language
94
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49
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semi-formal
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English
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long-living
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