What is the difference between a roth ira and a nondeductible ira?

You won't owe income taxes on the non-deductible amount you've contributed to the Best Gold and Silver IRA, just the investment gains. Contributions to the Roth IRA are made with after-tax money, and those withdrawn in retirement from the Best Gold and Silver IRA will not be taxable. To be eligible for a Roth IRA, your income cannot exceed certain IRS limits. With a Roth account, on the other hand, you don't pay taxes on any part of your withdrawals from the Best Gold and Silver IRA, including profits. Which means you're getting a completely tax-free return.

That gives a Roth a big advantage (no, it's HUGE) over a non-deductible IRA. They don't pay the same taxes. In both types of accounts, money is contributed after taxes. In other words, the investor pays the income tax due that year on the money deposited in the account.

In general, if you think you'll be in a higher tax bracket when you retire, a Roth IRA may be the best option. In a given tax year, as long as you or your spouse have sufficient earned or self-employment income, each of you can contribute to an IRA. You should start receiving the required minimum distributions (RMDs) from your IRA during the year you turn 72. The traditional IRA page explains the basic mechanisms for making non-deductible investments and keeping track of the base, and that page explains the details of using a traditional non-deductible IRA to make a contribution to a clandestine Roth IRA. If you now want to convert your non-deductible IRA to a Roth one, you'll have to pay income taxes on part of it.

Taxable accounts also have no contribution limits or retirement restrictions; a traditional IRA is a retirement account with a low annual contribution limit, and those withdrawn before age 59 impose a 10% penalty if certain exceptions do not apply. Traditional IRA contributions are tax-deductible on state and federal tax returns for the year in which you make the contribution. If you withdraw profits (sums greater than the amount you contributed) from your Roth IRA, different rules apply. Only in unusual situations, in which marginal tax rates are very low today and will be much higher at the time of withdrawal, would it make sense to choose not to deduct contributions, but in these situations a Roth IRA should be available and it would be a better alternative.

For single taxpayers and heads of household, eligibility to make tax-deductible contributions to a traditional IRA depends on their modified adjusted gross income (MAGI). Your ability to fund different types of IRAs is subject to restrictions based on your income, your tax-filing status, and your eligibility to participate in an employer-sponsored retirement plan, even if no contribution has been made to the plan in a given tax year. Your cost base is the sum of non-deductible contributions to your IRA minus any withdrawals or distribution of non-deductible contributions. Even if you think the market is overvalued, it's usually worth making the maximum contributions to your IRAs.

However, basically, if you're looking for a place to store your long-term retirement savings, I can't think of a good reason to make a non-deductible IRA if you can do a traditional IRA or a Roth IRA. Most brokerage firms act as custodians of both Roths and traditional IRAs with the same minimums, fees and conditions for each. The following table summarizes the differences between a traditional non-deductible IRA and a taxable account.