I was terminated from my job in 2023. I had a 401k while employed. Turbo Tax tells me this deems me as having a 401k for the entire year (even though I did not)
So, any 2023 IRA contribution is subject to income limits to determine if contribution is deductible. Turbo tax tells me I am not eligible to reduce my taxable income by IRA contributions because my MAGI is over 136k, filing as MFJ.
My question is: If I am unable to deduct my IRA contributions for 2023, due to exceeding income limits, doesn't this mean my IRA contribution gets taxed twice when I withdraw from my IRA in the future?
It seems I have no option but a ROTH IRA?
thank you
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While you can protect your cost basis by tracking non deductible contributions with form 8606, contributing to a Roth would be simpler if eligible to do so.
https://www.irs.gov/forms-pubs/about-form-8606
"f I am unable to deduct my IRA contributions for 2023, due to exceeding income limits, doesn't this mean my IRA contribution gets taxed twice when I withdraw from my IRA in the future?"
No. Distributions from your traditional IRAs will be proportionate amounts of taxable pre-tax money and nontaxable basis in nondeductible traditional IRA contributions.
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