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Does it make more sense for me to just invest extra cash in a taxable brokerage account than a non-deductible IRA?

I max out my 401(k), and I don't qualify for Roth IRA. I make about $140,000 (salary & bonus).

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  Answers  |  1

December 13, 2016

Great question. By "max out" I am assuming you are contributing the full $18,000 per year if you are under 50yo.

One way to get funds to a Roth IRA is through the non-deductible IRA by doing a Roth conversion before 12/31. Anything you convert is however considered taxable income but all funds converted assuming you meet conditions in the Roth IRA would be tax-free in retirement after 59.5 years old. If you go the taxable brokerage account be sure to look at tax efficient ETFs instead of mutual funds to reduce the risk of taxable distributions this time of year via 1099. Please don't take this as specific advice or a recommendation and be sure to consult with your tax professional before making a decision.

Thanks,
Dustin Javier, CFP

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