In what year did IRA contributions switch from deductible to non-deductible? I straddle the line whenever it was.

[crazymt]

We started contributions in 1980 and made them until we retired in 1993 and 1994.  Somewhere in there the contributions went from deductible to non-deductible.  What year was that?

[dmertz · Accepted solution]

1987 was the first year that nondeductible contributions were permitted to be made to a traditional IRA.  Nondeductible contributions are required to be reported on Forms 8606, so your nondeductible traditional IRA contributions would be those reported on Forms 8606 plus any adjustments to basis reported on a Form 8606 resulting from the rollover of after-tax amounts from an employer plan.

Contributions were not exclusively nondeductible in 1987 and beyond.  Contributions were nondeductible only if you claimed them as being nondeductible or you or your spouses participation in a retirement plan at work, your filing status and your modified AGI made them nondeductible.  If the contributions were deductible but you failed to report them as a deduction or as being nondeductible, you simply lost the opportunity to claim the deduction.  You could file late Forms 8606 to report them as nondeductible contributions, but there is a late filing penalty for each late-filed Form 8606.