stogie1020

I have a Roth and a traditional.

AGI is too high to add to the Roth.

I can add 5K to the traditional for 2010 with no added benefit of a deduction from my AGI.

My question is: Is there any reason NOT to add the 5K to the traditional?

GIBSON6594

If you're not getting the deduction benefit, why not just invest in something that won't be locked up for 20 years?

stogie1020

^This is the kind of info I was looking for.

Fibonacci

Still grows tax deferred, so why not?

stogie1020

Point. Counterpoint.


Fib, how is that tax deferred though since it will be post tax dollars going in? I mean, no capital gains is true for ANY investment until you cash it out, right?

Fibonacci

Unlike a taxable account, your gains and income will not be taxed until you have to take distributions, so its still a more efficient way of investing. I'm not an accountant or financial planner -- but this is an easy decision as long as you don't need the money, I think anyone who is in retail would agree with me.

stogie1020

I am certainly open to the idea, but I am just not seeing the difference between this and, say, an individual stock purchase for 5K that I don't sell for 20 years and re-invest any interest paid or dividends.

Fibonacci

^^ If you don't see the difference, perhaps you should talk with a financial planner.

Given the choice:

A. Tax deferred account
B. Non tax deferred account

Gonna go with A every time I have the option, but that's cuz I'm silly like that.

stogie1020

OK, thanks.

ttribe

Agreed; especially in a period where we are expecting HIGHER rates in the future than we have now. Given the deficits this country is running, I think the probability of higher future tax rates is significant.