Which is Better: Investing in a Non-Deductible IRA or Post-Tax Brokerage? | YMYW Podcast

Contribute to Non-Deductible IRA or Post-Tax Brokerage? (Allen) In the past, while working, I typically made too much salary to contribute to a Roth IRA, or get a deduction for a regular IRA contribution. Therefore, I made annual contributions to a non-deductible IRA, and I have been keeping track of the basis, so that I don't pay taxes on the non-deductible contributions, when I decide to start taking withdrawals. MY QUESTION - In general, does contributing to a non-deductible IRA make sense vs. post tax contribution to a brokerage account, given that the non-basis portion of the IRA will be taxed as income, when I take a distribution, vs. only paying long term capital gains on any money invested in a brokerage account? Seems like my income tax rate will be lower than capital gains rate, when I start withdrawing money from the IRA, but who knows where tax rates will be, in 15 years!!!!! I understand that our friends in DC are looking to increase capital gains rates to equal the income tax rates, which would make this a moot question. WATCH as Joe Anderson, CFP® and Big Al Clopine, CPA answer your money questions with Producer Andi Last on the Your Money, Your Wealth® podcast, now on video! Subscribe to the YMYW podcast and listen to the full episode: Got money questions of your own? Ask Joe & Big Al On Air: Download Pursuing a Better Investment Experience: Pure Financial Advisors, LLC is a fee-only Registered Investment Advisor providing comprehensive retirement planning services and tax-optimized investment management to thousands of people across the nation. Schedule a free assessment with any one of our professionals, either online or at one of our financial planning offices in San Diego, Brea, Irvine, and Woodland Hills, California: Subscribe to our YouTube channel and stay tuned for the next episode of the Your Money, Your Wealth® TV show: IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor. • Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation. CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period....(read more)

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For those looking to invest their money for the long term, two options available are contributing to a non-deductible IRA or a post-tax brokerage account. These accounts are designed to help individuals grow their wealth and secure their financial futures. However, understanding the differences between these two options and determining which one is best for you can be challenging. Non-Deductible IRA A non-deductible IRA is a retirement savings account specifically designed for those who are not eligible to contribute to a traditional IRA. These individuals may earn too much income or already participate in an employer-sponsored retirement plan, which disqualifies them from making tax-deductible contributions to a traditional IRA. Instead, they can contribute after-tax dollars to a non-deductible IRA and let that money grow tax-free. When it comes time to withdraw funds from the non-deductible IRA, only the earnings are taxed, and at a lower rate than ordinary income tax. The benefits of contributing to a non-deductible IRA include the potential for tax-free growth, the ability to contribute up to $6,000 per year (or $7,000 if over 50), and the ability to diversify investment options. Post-Tax Brokerage Account A post-tax brokerage account is a more general investment account that allows individuals to buy and sell a wide range of securities, such as stocks, bonds, and mutual funds. This account is not tied to a retirement savings plan and does not provide the same tax benefits as an IRA. Funds contributed to a post-tax brokerage account have already been taxed and will be taxed again when gains are realized. An advantage of a post-tax brokerage account is that there are no contribution limits, so those who have maxed out their IRA contributions can continue investing in this account. Which Option is Best? Determining the investment option that is best for an individual depends on their financial situation and goals. If the goal is to save money for retirement, a non-deductible IRA may be the way to go. However, if the individual desires more flexibility and does not need to save for retirement specifically, a post-tax brokerage account may be the better choice. It is important to note that individuals can invest in both a non-deductible IRA and a post-tax brokerage account. This strategy can help diversify investments and provide more flexibility in investment options. In conclusion, deciding between contributing to a non-deductible IRA or a post-tax brokerage account involves careful consideration of an individual's financial goals and circumstances. Both options offer valuable benefits and should be explored to determine which one is right for you. https://inflationprotection.org/which-is-better-investing-in-a-non-deductible-ira-or-post-tax-brokerage-ymyw-podcast/?feed_id=106527&_unique_id=6485943817e16 #Inflation #Retirement #GoldIRA #Wealth #Investing #AlanClopine #assetallocation #BigAlClopine #financialadvice #FinancialPlanning #financialpodcast #howtoinvest #investing #investingstrategy #JoeAnderson #nondeductibleira #personalfinance #personalfinanceforbeginners #personalfinancepodcast #PostTaxBrokerage #purefinancialadvisors #Retirement #retirementplanning #retirementpodcast #retirementportfolio #RothIRA #YourMoneyYourWealth #YourMoneyYourWealthpodcast #TraditionalIRA #AlanClopine #assetallocation #BigAlClopine #financialadvice #FinancialPlanning #financialpodcast #howtoinvest #investing #investingstrategy #JoeAnderson #nondeductibleira #personalfinance #personalfinanceforbeginners #personalfinancepodcast #PostTaxBrokerage #purefinancialadvisors #Retirement #retirementplanning #retirementpodcast #retirementportfolio #RothIRA #YourMoneyYourWealth #YourMoneyYourWealthpodcast