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Nondeductible IRA Contributions

January 09, 2019

Most people can contribute to an IRA even if you do not deduct it from your tax return. If you make a nondeductible IRA contribution, remember to file Form 8606 with your taxes. This allows you and the IRS to keep a record of nondeductible IRA contributions.

Since the contribution is made with “after-tax money” (which is why it is called nondeductible contribution), you do not want to pay taxes upon withdrawal at 70-1/2. The 8606 keeps a running total so only the earnings are taxed when you withdraw, not your initial deposit.

If you don’t file the 8606, there is a risk you will pay tax again on the deposits – something none of us wants to do!


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