Q&A: Non-deductible IRA contributions

Q: Because my income is too high, I cannot make a deductible or Roth IRA contribution. Is there any advantage of making non-deductible IRA contributions?

A: Over the years, because non-deductible IRA contributions provided limited tax benefits, most advisers did not recommend them. However, starting in 2010, regardless of your income, non-deductible IRAs can be converted into Roth IRAs. You will then pay tax only on the gain that exceeds your original contributions. Furthermore, Roth IRAs are not subject to minimum distributions and can also be passed on to the next generation.