rjs
Level 15
Level 15

Retirement tax questions

Most IRA contributions are deductible in the year that you make the contribution. That's one of the biggest advantages of contributing to an IRA. So it's very rare for people to make nondeductible IRA contributions, since it cancels out one of the major tax advantages. Also, if someone wanted to contribute to an IRA without being able to deduct the contribution, contributing to a Roth IRA has significant advantages over making a nondeductible contribution to a traditional IRA. For all these reasons, it's very uncommon for people to make nondeductible IRA contributions.

One other factor is the "keeping track" part. You have to both make and keep track of nondeductible IRA contributions. Most people aren't careful about keeping financial records over long periods of time. Someone who made a nondeductible contribution to an IRA 20 or 30 years ago typically doesn't have the records anymore. They should have been filing a Form 8606 with their tax return every year, carrying forward their "basis" (total of nondeductible contributions) from year to year. But again, people aren't careful about things like that and the information tends to get lost over the course of many years. So as uncommon as it is for people to make nondeductible IRA contributions, it's even more uncommon for them to make nondeductible contributions and keep track of them.