View source for Non-deductible traditional IRA

{{US|reason=irrelevant}}
A '''non-deductible Traditional IRA''' results whenever contributions to a [[Traditional IRA]] (tIRA) are not deducted on the taxpayer's tax return. It is not a separate type of account; rather, it is a ''feature'' of a Traditional IRA that contributions can be deducted from income (subject to income limitations) or not deducted, at the option of the investor. Non-deductible and deductible Traditional IRA contributions, and [[Roth IRA]] contributions, share the same annual limit of $6,000 per year, or $7,000 per year for those 50 and over (as of 2020). Due to the availability of the [[Backdoor Roth IRA]], appropriate situations for non-deductible Traditional IRA investments are very limited; see [[#Appropriate uses|appropriate uses]].

==Comparisons with other accounts==

The following table summarizes the differences between the three types of individual IRA investments and a taxable account:

{| class="wikitable"
|-
! Account/Contribution !! Contributions !! Growth !! Withdrawals
|-
| '''Deductible Traditional IRA''' || Pre-tax (tax-deductible) || Tax-deferred || Fully taxed
|-
| '''Non-Deductible Traditional IRA''' || After-tax || Tax-deferred || Growth is fully taxed; return of basis is tax-free
|-
| '''Roth IRA''' || After-tax || Tax-free || Tax-free
|-
| '''Taxable Account''' || After-tax || Interest, dividends, and distributions are taxed || Capital gains are taxed; return of basis is tax-free
|}

===Roth IRA===

A [[Roth IRA]] will always be as good or better than a non-deductible Traditional IRA. In both cases contributions are after-tax, but all future growth and withdrawals from a Roth IRA are tax-free, whereas the withdrawal of growth from a non-deductible Traditional IRA is taxable as income. A Roth IRA and Traditional IRA share the same annual contribution limit. A Roth IRA has an income limit for contribution, whereas a non-deductible Traditional IRA does not. This income limit can be circumvented with the [[Backdoor Roth IRA]].

===Deductible Traditional IRA===

If you are eligible to deduct contributions to a Traditional IRA (subject to the [[Traditional_IRA#Contribution_and_income_limits|income limits]]), it is almost always better to do so. Deducting the contributions is effectively an interest-free loan from the government. Only in unusual situations where marginal tax rates are very low today and will be much higher at withdrawal would it make sense to elect not to deduct contributions, but in these situations a Roth IRA should be available and would be a better alternative.

===Taxable account===

A [[Taxable account|taxable account]] has key similarities to a non-deductible Traditional IRA: contributions are made after-tax, and upon withdrawal, growth is taxable, whereas basis is returned tax-free. Any yield (interest, dividends, capital gains distributions) from investments within a taxable account are taxable in the year they are earned, whereas a Traditional IRA is fully tax-deferred. However, a taxable account has several important advantages. [[Qualified dividend|Qualified dividends]] and long-term capital gains are taxed at a reduced rate (as low as 0%) compared to ordinary income. Taxable accounts also have no contribution limits and no withdrawal restrictions; a Traditional IRA is a retirement account with a low annual contribution limit, and withdrawals prior to age 59.5 are assessed a 10% penalty, if certain exceptions don’t apply. The following table summarizes the differences between a non-deductible Traditional IRA and a taxable account.

{| class="wikitable"
|+ style="text-align: center;" | '''Comparison Between Non-Deductible Traditional IRA and Taxable Account'''
|-
! scope="col" style="width: 100pt;" | 
! scope="col" style="width: 450pt;" | '''Non-Deductible Traditional IRA'''
! scope="col" style="width: 500pt;" | '''Taxable Account'''
! scope="col" style="width: 150pt;" | '''Advantage'''
|-
| '''Contribution Limit'''||$6,000 ($7,000 for age >=50) combined for all Traditional IRAs and [[Roth IRA|Roth IRAs]]||No contribution limits||Taxable account<ref>a lower contribution limit wouldn't be a good reason to ''not'' invest money first into a non-deductible Traditional IRA, and any excess into a taxable account, if the non-deductible Traditional IRA was otherwise the preferred account</ref>
|-
| '''Withdrawal Restrictions'''||Withdrawals prior to age 59.5 are assessed a 10% penalty, with several exceptions. [[IRA distribution tables|Required Minimum Distributions (RMDs)]] begin at age 72||No withdrawal restrictions. No [[IRA distribution tables|RMDs]].||Taxable Account
|-
| '''Taxation of Growth'''||Growth is fully tax-deferred until withdrawal||Interest, dividends, and capital gains are taxable in the year they are earned. Gains can be [[Tax gain harvesting|harvested]].||Non-deductible Traditional IRA
|-
| '''Deduction of Losses'''||Losses are non-deductible||[[Tax loss harvesting|Losses are deductible]] against other capital gains, and up to $3,000 of other income. Non-deductible capital losses carry over to future years||Taxable account
|-
| '''Tax Rates'''||Withdrawn growth is taxed as ordinary income||[[Qualified dividend|Qualified dividends]] and long-term (>1 year) capital gains are taxed at reduced rate, as low as 0%. Interest, non-qualified dividends, and short-term gains are taxed as ordinary income. Gains subject to [[ACA net investment income tax|NIIT]]||Taxable account
|-
| '''Charitable Donations'''||[[Qualified charitable distributions|Qualified Charitable Distributions (QCDs)]] are tax-free to you and the charity||[[Donating appreciated securities|Appreciated shares can be donated]] directly to a charity and incur no capital gains tax||Tie
|-
| '''[[Asset protection|Asset Protection]]'''||IRA's receive [[Asset_protection#Investing_in_an_IRA|federal protection from bankruptcy]] and [http://www.thetaxadviser.com/content/dam/tta/issues/2014/jan/stateirachart.pdf state-level protection from creditors], which varies widely by the state||No special asset protection||Non-deductible Traditional IRA
|-
| '''Estate Planning'''||Heirs inherit Traditional IRA with basis; withdrawals of growth are taxable. Can be made into a [[Stretch IRA]].||Cost basis [[Step-up in basis|steps up]] at death; heirs receive account tax-free.||Taxable account
|}

==Appropriate uses==

Non-deductible Traditional IRA contributions are the first step in making [[Backdoor Roth IRA]] contributions, and are most commonly used for this strategy.

The availability of the Backdoor Roth IRA usually makes long-term investments in a non-deductible Traditional IRA inappropriate. They are appropriate only if ALL the following conditions apply:

# Your income and participation in a retirement plan at work makes you ineligible for [https://www.irs.gov/retirement-plans/ira-deduction-limits deductible] Traditional IRA and Roth IRA [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits contributions]. 
# You have Traditional IRAs, SEP-IRAs, and/or SIMPLE IRAs with a large total pre-tax balance that can’t be disposed of:
## You don’t have a [[401(k)]] or other [[Employer retirement plans overview|employer retirement account]] that will accept a [[Rollover|rollover]] from your Traditional IRA (or the fees and investment options from the 401k are too poor for this to be advisable)
## You are unable or unwilling to start a business and open a [[Solo 401(k) plan|Solo 401(k)]] that can accept the Traditional IRA as a rollover. See [https://www.bogleheads.org/forum/viewtopic.php?t=281551 this thread] in the forum for a discussion of legal requirements for opening a Solo 401(k).<br>A large pre-tax balance may cause more tax than desirable when using the [[Backdoor Roth]] process due to the [[Backdoor_Roth#Cautions|pro-rata rule]].
# You plan on investing in [[Tax-efficient fund placement|tax in-efficient]] investments that would favor a non-deductible Traditional IRA over a [[Taxable account|taxable account]]; see [[#Comparison to taxable account|below]]
# You plan on holding the investment for a long enough time (decades) for the difference in performance, compared to a taxable account, to be significant
# The long-term performance advantage outweighs the superior liquidity of a taxable account
# You are confident you will spend the money during your lifetime, as opposed to leaving it as part of your estate

==Performance==

Evaluating the performance of a non-deductible Traditional IRA is straightforward; the non-deductible basis stays constant, and the value grows according to the investment's rate of return. Upon withdrawal, the difference between the value and the basis is taxed as ordinary income. Variables are defined as follows:

<math>
\begin{align}
t & = \text{time} \\
V(t) & = \text{investment value at time t} \\
B & = \text{non-deductible basis} \\
r & = \text{overall rate of return} \\
tr_{w} & = \text{tax rate on withdrawals} \\
\end{align}
</math>

If the investment compounds continuously, the value of the investment at any future time ''t'' can be written as follows. The formula uses exponentials of base ''e'' <math>\approx</math> 2.71828.

<math>
\begin{align}
V(t) & = V(0) \cdot e^{(r \cdot t)} 
\end{align}
</math>

For periodic (for example, annual) compounding, the investment value is as follows. When analyzing a periodic compounding investment, make sure the period on the rates of growth matches the compounding period. For example, a monthly compounding investment with an annual rate of return of 8% would have a periodic return of ~0.667% (8% / 12). Time should also have the units of number of compounding periods, eg. number of months. 

<math>
\begin{align}
V(t) & = V(0) \cdot (1 + r)^{t} 
\end{align}
</math>

Finally, the after-tax value of the account is:

<math>
\begin{align}
\text{after-tax value} = V(t) - \left ( V(t) - B \right ) \cdot tr_{w} 
\end{align}
</math>

===Example table===

You want to invest $6,000 of pre-tax earnings in a mutual fund and plan to sell it after 30 years. Your federal marginal tax rate is 24% on ordinary income and 15% on qualified dividends and long-term capital gains. The mutual fund has an expected total return of 9%, with capital appreciation of 7% and a dividend yield of 2%, with the latter 100% qualified. The balances and bases (where appropriate) for a deductible Traditional IRA, Roth IRA, non-deductible Traditional IRA, and a taxable account are shown in the table below:

A spreadsheet that can reproduce the table is on the 'Non-ded. IRA' tab of the [https://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/ Case Study Spreadsheet]<ref name ="MrMoney">[http://forum.mrmoneymustache.com/forum-information-faqs/case-study-spreadsheet-updates/ The MMM Case Study Spreadsheet], [http://forum.mrmoneymustache.com/index.php The Mr. Money Mustache Community], viewed Apr. 14, 2018.</ref>  One may enter different assumptions there to see how results change.

{| class="wikitable collapsible autocollapse"
!  !! Deductible tIRA !! Roth IRA !! Non-Deductible tIRA !! Non-Deductible tIRA Basis !! Taxable !! Taxable Basis
|-
! Initial
| $6,000.00 || $4,560.00 || $4,560.00 || $4,560.00 || $4,560.00 || $4,560.00
|-
! 1
| $6,540.00 || $4,970.40 || $4,970.40 || $4,560.00 || $4,956.72 || $4,637.52
|-
! 2
| $7,128.60 || $5,417.74 || $5,417.74 || $4,560.00 || $5,387.95 || $4,721.78
|-
! 3
| $7,770.17 || $5,905.33 || $5,905.33 || $4,560.00 || $5,856.71 || $4,813.38
|-
! 4
| $8,469.49 || $6,436.81 || $6,436.81 || $4,560.00 || $6,366.24 || $4,912.94
|-
! 5
| $9,231.74 || $7,016.13 || $7,016.13 || $4,560.00 || $6,920.10 || $5,021.17
|-
! 6
| $10,062.60 || $7,647.58 || $7,647.58 || $4,560.00 || $7,522.15 || $5,138.81
|-
! 7
| $10,968.23 || $8,335.86 || $8,335.86 || $4,560.00 || $8,176.58 || $5,266.69
|-
! 8
| $11,955.38 || $9,086.09 || $9,086.09 || $4,560.00 || $8,887.94 || $5,405.69
|-
! 9
| $13,031.36 || $9,903.83 || $9,903.83 || $4,560.00 || $9,661.19 || $5,556.78
|-
! 10
| $14,204.18 || $10,795.18 || $10,795.18 || $4,560.00 || $10,501.72 || $5,721.03
|-
! 11
| $15,482.56 || $11,766.74 || $11,766.74 || $4,560.00 || $11,415.37 || $5,899.55
|-
! 12
| $16,875.99 || $12,825.75 || $12,825.75 || $4,560.00 || $12,408.50 || $6,093.62
|-
! 13
| $18,394.83 || $13,980.07 || $13,980.07 || $4,560.00 || $13,488.04 || $6,304.56
|-
! 14
| $20,050.36 || $15,238.28 || $15,238.28 || $4,560.00 || $14,661.50 || $6,533.86
|-
! 15
| $21,854.89 || $16,609.72 || $16,609.72 || $4,560.00 || $15,937.05 || $6,783.10
|-
! 16
| $23,821.84 || $18,104.59 || $18,104.59 || $4,560.00 || $17,323.58 || $7,054.03
|-
! 17
| $25,965.80 || $19,734.01 || $19,734.01 || $4,560.00 || $18,830.73 || $7,348.53
|-
! 18
| $28,302.72 || $21,510.07 || $21,510.07 || $4,560.00 || $20,469.00 || $7,668.66
|-
! 19
| $30,849.97 || $23,445.98 || $23,445.98 || $4,560.00 || $22,249.80 || $8,016.63
|-
! 20
| $33,626.46 || $25,556.11 || $25,556.11 || $4,560.00 || $24,185.54 || $8,394.87
|-
! 21
| $36,652.85 || $27,856.16 || $27,856.16 || $4,560.00 || $26,289.68 || $8,806.03
|-
! 22
| $39,951.60 || $30,363.22 || $30,363.22 || $4,560.00 || $28,576.88 || $9,252.95
|-
! 23
| $43,547.25 || $33,095.91 || $33,095.91 || $4,560.00 || $31,063.07 || $9,738.76
|-
! 24
| $47,466.50 || $36,074.54 || $36,074.54 || $4,560.00 || $33,765.56 || $10,266.83
|-
! 25
| $51,738.48 || $39,321.25 || $39,321.25 || $4,560.00 || $36,703.16 || $10,840.85
|-
! 26
| $56,394.95 || $42,860.16 || $42,860.16 || $4,560.00 || $39,896.33 || $11,464.80
|-
! 27
| $61,470.49 || $46,717.57 || $46,717.57 || $4,560.00 || $43,367.31 || $12,143.04
|-
! 28
| $67,002.84 || $50,922.16 || $50,922.16 || $4,560.00 || $47,140.27 || $12,880.28
|-
! 29
| $73,033.09 || $55,505.15 || $55,505.15 || $4,560.00 || $51,241.47 || $13,681.67
|-
! 30
| $79,606.07 || $60,500.61 || $60,500.61 || $4,560.00 || $55,699.48 || $14,552.77
|-
! After-Tax
| $60,500.61 || $60,500.61 || $47,074.87 || - || $49,527.48 || -
|}

===Comparison between non-deductible tIRA and taxable accounts===

The following analysis looks at four investments over a span of up to 40 years in a non-deductible Traditional IRA (ND tIRA) and a [[Taxable account|taxable account]]. The investor is assumed to have a [[Marginal tax rate|marginal tax rate]] of 24% for ordinary income and 15% for [[Qualified dividend|qualified dividends]] and long-term capital gains. The investor contributes $6,000 after-tax per year for up to 40 years. 

[[File:NDTIRAvsTaxable fullsize.png|400px|thumb|right|Non-Deductible Traditional IRA Advantage versus Taxable Account]]

The following conclusions can be reached by analyzing the performance of a taxable account compared to a non-deductible Traditional IRA:

* [[Tax-efficient fund placement|Tax efficient]] investments, such as [[Index fund|passive stock funds]], perform better in a taxable account
* Tax inefficient investments, such as [[Corporate bonds|corporate bonds]] and [[Real estate investment trust|REITs]], perform better in a non-deductible Traditional IRA
* The performance advantage for a non-deductible Traditional IRA is greater over a longer period of time, and when [[Marginal tax rate|marginal tax rates]] are higher

====Stock fund====

* Total Return: 9%
* Yield: 2%
* Qualified Yield: 90%

{| class="wikitable collapsible autocollapse" style="text-align:right"
! Year !! Taxable Balance !! Taxable Basis !! Taxable After-Tax !! ND tIRA Balance !! ND tIRA Basis !! ND tIRA After-Tax !! ND tIRA Advantage
|-
! 0
| $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || 0.00%
|-
! 1
| $12,580.92 || $12,100.92 || $12,508.92 || $12,600.00 || $12,000.00 || $12,456.00 || -0.42%
|-
! 2
| $19,799.00 || $18,312.53 || $19,576.03 || $19,860.00 || $18,000.00 || $19,413.60 || -0.83%
|-
! 3
| $27,715.94 || $24,645.55 || $27,255.39 || $27,846.00 || $24,000.00 || $26,922.96 || -1.22%
|-
! 4
| $36,399.40 || $31,111.73 || $35,606.25 || $36,630.60 || $30,000.00 || $35,039.26 || -1.59%
|-
! 5
| $45,923.59 || $37,723.97 || $44,693.65 || $46,293.66 || $36,000.00 || $43,823.18 || -1.95%
|-
! 6
| $56,369.91 || $44,496.41 || $54,588.89 || $56,923.03 || $42,000.00 || $53,341.50 || -2.29%
|-
! 7
| $67,827.65 || $51,444.55 || $65,370.18 || $68,615.33 || $48,000.00 || $63,667.65 || -2.60%
|-
! 8
| $80,394.72 || $58,585.41 || $77,123.33 || $81,476.86 || $54,000.00 || $74,882.41 || -2.91%
|-
! 9
| $94,178.54 || $65,937.65 || $89,942.41 || $95,624.55 || $60,000.00 || $87,074.66 || -3.19%
|-
! 10
| $109,296.91 || $73,521.73 || $103,930.63 || $111,187.00 || $66,000.00 || $100,342.12 || -3.45%
|-
! 11
| $125,879.03 || $81,360.10 || $119,201.19 || $128,305.70 || $72,000.00 || $114,792.33 || -3.70%
|-
! 12
| $144,066.64 || $89,477.39 || $135,878.25 || $147,136.27 || $78,000.00 || $130,543.57 || -3.93%
|-
! 13
| $164,015.17 || $97,900.59 || $154,097.98 || $167,849.90 || $84,000.00 || $147,725.92 || -4.14%
|-
! 14
| $185,895.12 || $106,659.33 || $174,009.75 || $190,634.89 || $90,000.00 || $166,482.52 || -4.33%
|-
! 15
| $209,893.49 || $115,786.08 || $195,777.38 || $215,698.38 || $96,000.00 || $186,970.77 || -4.50%
|-
! 16
| $236,215.37 || $125,316.49 || $219,580.54 || $243,268.22 || $102,000.00 || $209,363.84 || -4.65%
|-
! 17
| $265,085.75 || $135,289.63 || $245,616.33 || $273,595.04 || $108,000.00 || $233,852.23 || -4.79%
|-
! 18
| $296,751.35 || $145,748.38 || $274,100.90 || $306,954.54 || $114,000.00 || $260,645.45 || -4.91%
|-
! 19
| $331,482.81 || $156,739.73 || $305,271.35 || $343,650.00 || $120,000.00 || $289,974.00 || -5.01%
|-
! 20
| $369,576.98 || $168,315.27 || $339,387.72 || $384,015.00 || $126,000.00 || $322,091.40 || -5.10%
|-
! 21
| $411,359.42 || $180,531.56 || $376,735.24 || $428,416.50 || $132,000.00 || $357,276.54 || -5.17%
|-
! 22
| $457,187.24 || $193,450.62 || $417,626.75 || $477,258.15 || $138,000.00 || $395,836.19 || -5.22%
|-
! 23
| $507,452.11 || $207,140.51 || $462,405.37 || $530,983.96 || $144,000.00 || $438,107.81 || -5.25%
|-
! 24
| $562,583.62 || $221,675.86 || $511,447.46 || $590,082.36 || $150,000.00 || $484,462.59 || -5.28%
|-
! 25
| $623,052.97 || $237,138.51 || $565,165.80 || $655,090.59 || $156,000.00 || $535,308.85 || -5.28%
|-
! 26
| $689,376.96 || $253,618.27 || $624,013.16 || $726,599.65 || $162,000.00 || $591,095.74 || -5.28%
|-
! 27
| $762,122.44 || $271,213.59 || $688,486.11 || $805,259.62 || $168,000.00 || $652,317.31 || -5.25%
|-
! 28
| $841,911.13 || $290,032.49 || $759,129.33 || $891,785.58 || $174,000.00 || $719,517.04 || -5.22%
|-
! 29
| $929,424.97 || $310,193.43 || $836,540.24 || $986,964.14 || $180,000.00 || $793,292.74 || -5.17%
|-
! 30
| $1,025,411.89 || $331,826.36 || $921,374.06 || $1,091,660.55 || $186,000.00 || $874,302.02 || -5.11%
|-
! 31
| $1,130,692.27 || $355,073.79 || $1,014,349.50 || $1,206,826.60 || $192,000.00 || $963,268.22 || -5.04%
|-
! 32
| $1,246,165.90 || $380,092.03 || $1,116,254.82 || $1,333,509.27 || $198,000.00 || $1,060,987.04 || -4.95%
|-
! 33
| $1,372,819.68 || $407,052.54 || $1,227,954.61 || $1,472,860.19 || $204,000.00 || $1,168,333.75 || -4.86%
|-
! 34
| $1,511,736.08 || $436,143.37 || $1,350,397.18 || $1,626,146.21 || $210,000.00 || $1,286,271.12 || -4.75%
|-
! 35
| $1,664,102.37 || $467,570.77 || $1,484,622.63 || $1,794,760.83 || $216,000.00 || $1,415,858.23 || -4.63%
|-
! 36
| $1,831,220.76 || $501,560.97 || $1,631,771.79 || $1,980,236.92 || $222,000.00 || $1,558,260.06 || -4.51%
|-
! 37
| $2,014,519.56 || $538,362.10 || $1,793,095.94 || $2,184,260.61 || $228,000.00 || $1,714,758.06 || -4.37%
|-
! 38
| $2,215,565.34 || $578,246.32 || $1,969,967.49 || $2,408,686.67 || $234,000.00 || $1,886,761.87 || -4.22%
|-
! 39
| $2,436,076.37 || $621,512.13 || $2,163,891.74 || $2,655,555.33 || $240,000.00 || $2,075,822.05 || -4.07%
|-
! 40
| $2,677,937.29 || $668,486.94 || $2,376,519.74 || $2,927,110.87 || $246,000.00 || $2,283,644.26 || -3.91%
|}

====50/50 stock/bond blend====

* Total Return: 7%
* Yield: 3%
* Qualified Yield: 30%

{| class="wikitable collapsible autocollapse" style="text-align:right"
! Year !! Taxable Balance !! Taxable Basis !! Taxable After-Tax !! ND tIRA Balance !! ND tIRA Basis !! ND tIRA After-Tax !! ND tIRA Advantage
|-
! 0
| $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || 0.00%
|-
! 1
| $12,381.66 || $12,141.66 || $12,345.66 || $12,420.00 || $12,000.00 || $12,319.20 || -0.21%
|-
! 2
| $19,169.26 || $18,433.99 || $19,058.97 || $19,289.40 || $18,000.00 || $18,979.94 || -0.41%
|-
! 3
| $26,388.61 || $24,886.58 || $26,163.31 || $26,639.66 || $24,000.00 || $26,006.14 || -0.60%
|-
! 4
| $34,067.19 || $31,509.61 || $33,683.56 || $34,504.43 || $30,000.00 || $33,423.37 || -0.77%
|-
! 5
| $42,234.21 || $38,313.94 || $41,646.17 || $42,919.74 || $36,000.00 || $41,259.01 || -0.93%
|-
! 6
| $50,920.73 || $45,311.09 || $50,079.28 || $51,924.13 || $42,000.00 || $49,542.34 || -1.07%
|-
! 7
| $60,159.79 || $52,513.33 || $59,012.82 || $61,558.82 || $48,000.00 || $58,304.70 || -1.20%
|-
! 8
| $69,986.56 || $59,933.70 || $68,478.63 || $71,867.93 || $54,000.00 || $67,579.63 || -1.31%
|-
! 9
| $80,438.40 || $67,586.08 || $78,510.55 || $82,898.69 || $60,000.00 || $77,403.00 || -1.41%
|-
! 10
| $91,555.09 || $75,485.23 || $89,144.61 || $94,701.60 || $66,000.00 || $87,813.21 || -1.49%
|-
! 11
| $103,378.91 || $83,646.85 || $100,419.10 || $107,330.71 || $72,000.00 || $98,851.34 || -1.56%
|-
! 12
| $115,954.84 || $92,087.62 || $112,374.76 || $120,843.86 || $78,000.00 || $110,561.33 || -1.61%
|-
! 13
| $129,330.73 || $100,825.32 || $125,054.92 || $135,302.93 || $84,000.00 || $122,990.22 || -1.65%
|-
! 14
| $143,557.46 || $109,878.82 || $138,505.66 || $150,774.13 || $90,000.00 || $136,188.34 || -1.67%
|-
! 15
| $158,689.15 || $119,268.21 || $152,776.01 || $167,328.32 || $96,000.00 || $150,209.52 || -1.68%
|-
! 16
| $174,783.36 || $129,014.86 || $167,918.09 || $185,041.30 || $102,000.00 || $165,111.39 || -1.67%
|-
! 17
| $191,901.33 || $139,141.49 || $183,987.36 || $203,994.20 || $108,000.00 || $180,955.59 || -1.65%
|-
! 18
| $210,108.18 || $149,672.28 || $201,042.79 || $224,273.79 || $114,000.00 || $197,808.08 || -1.61%
|-
! 19
| $229,473.16 || $160,632.94 || $219,147.12 || $245,972.95 || $120,000.00 || $215,739.44 || -1.55%
|-
! 20
| $250,069.94 || $172,050.80 || $238,367.07 || $269,191.06 || $126,000.00 || $234,825.21 || -1.49%
|-
! 21
| $271,976.89 || $183,954.95 || $258,773.60 || $294,034.43 || $132,000.00 || $255,146.17 || -1.40%
|-
! 22
| $295,277.34 || $196,376.33 || $280,442.19 || $320,616.85 || $138,000.00 || $276,788.80 || -1.30%
|-
! 23
| $320,059.94 || $209,347.82 || $303,453.12 || $349,060.02 || $144,000.00 || $299,845.62 || -1.19%
|-
! 24
| $346,418.95 || $222,904.44 || $327,891.77 || $379,494.23 || $150,000.00 || $324,415.61 || -1.06%
|-
! 25
| $374,454.66 || $237,083.39 || $353,848.97 || $412,058.82 || $156,000.00 || $350,604.70 || -0.92%
|-
! 26
| $404,273.72 || $251,924.26 || $381,421.30 || $446,902.94 || $162,000.00 || $378,526.23 || -0.76%
|-
! 27
| $435,989.57 || $267,469.17 || $410,711.51 || $484,186.15 || $168,000.00 || $408,301.47 || -0.59%
|-
! 28
| $469,722.87 || $283,762.88 || $441,828.87 || $524,079.18 || $174,000.00 || $440,060.17 || -0.40%
|-
! 29
| $505,601.94 || $300,853.04 || $474,889.60 || $566,764.72 || $180,000.00 || $473,941.19 || -0.20%
|-
! 30
| $543,763.28 || $318,790.30 || $510,017.33 || $612,438.25 || $186,000.00 || $510,093.07 || 0.01%
|-
! 31
| $584,352.06 || $337,628.55 || $547,343.53 || $661,308.93 || $192,000.00 || $548,674.78 || 0.24%
|-
! 32
| $627,522.69 || $357,425.10 || $587,008.05 || $713,600.55 || $198,000.00 || $589,856.42 || 0.49%
|-
! 33
| $673,439.41 || $378,240.91 || $629,159.64 || $769,552.59 || $204,000.00 || $633,819.97 || 0.74%
|-
! 34
| $722,276.89 || $400,140.82 || $673,956.48 || $829,421.27 || $210,000.00 || $680,760.17 || 1.01%
|-
! 35
| $774,220.92 || $423,193.78 || $721,566.85 || $893,480.76 || $216,000.00 || $730,885.38 || 1.29%
|-
! 36
| $829,469.12 || $447,473.13 || $772,169.72 || $962,024.41 || $222,000.00 || $784,418.55 || 1.59%
|-
! 37
| $888,231.65 || $473,056.90 || $825,955.44 || $1,035,366.12 || $228,000.00 || $841,598.25 || 1.89%
|-
! 38
| $950,732.06 || $500,028.05 || $883,126.46 || $1,113,841.75 || $234,000.00 || $902,679.73 || 2.21%
|-
! 39
| $1,017,208.13 || $528,474.83 || $943,898.14 || $1,197,810.67 || $240,000.00 || $967,936.11 || 2.55%
|-
! 40
| $1,087,912.74 || $558,491.11 || $1,008,499.50 || $1,287,657.42 || $246,000.00 || $1,037,659.64 || 2.89%
|}

====Corporate bond fund====

* Total Return: 4%
* Yield: 4%
* Qualified Yield: 0%

{| class="wikitable collapsible autocollapse" style="text-align:right"
! Year !! Taxable Balance !! Taxable Basis !! Taxable After-Tax !! ND tIRA Balance !! ND tIRA Basis !! ND tIRA After-Tax !! ND tIRA Advantage
|-
! 0
| $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || 0.00%
|-
! 1
| $12,182.40 || $12,182.40 || $12,182.40 || $12,240.00 || $12,000.00 || $12,182.40 || 0.00%
|-
! 2
| $18,552.74 || $18,552.74 || $18,552.74 || $18,729.60 || $18,000.00 || $18,554.50 || 0.01%
|-
! 3
| $25,116.75 || $25,116.75 || $25,116.75 || $25,478.78 || $24,000.00 || $25,123.88 || 0.03%
|-
! 4
| $31,880.30 || $31,880.30 || $31,880.30 || $32,497.94 || $30,000.00 || $31,898.43 || 0.06%
|-
! 5
| $38,849.46 || $38,849.46 || $38,849.46 || $39,797.85 || $36,000.00 || $38,886.37 || 0.10%
|-
! 6
| $46,030.48 || $46,030.48 || $46,030.48 || $47,389.77 || $42,000.00 || $46,096.22 || 0.14%
|-
! 7
| $53,429.81 || $53,429.81 || $53,429.81 || $55,285.36 || $48,000.00 || $53,536.87 || 0.20%
|-
! 8
| $61,054.07 || $61,054.07 || $61,054.07 || $63,496.77 || $54,000.00 || $61,217.55 || 0.27%
|-
! 9
| $68,910.12 || $68,910.12 || $68,910.12 || $72,036.64 || $60,000.00 || $69,147.85 || 0.34%
|-
! 10
| $77,004.99 || $77,004.99 || $77,004.99 || $80,918.11 || $66,000.00 || $77,337.76 || 0.43%
|-
! 11
| $85,345.94 || $85,345.94 || $85,345.94 || $90,154.83 || $72,000.00 || $85,797.67 || 0.53%
|-
! 12
| $93,940.45 || $93,940.45 || $93,940.45 || $99,761.03 || $78,000.00 || $94,538.38 || 0.64%
|-
! 13
| $102,796.24 || $102,796.24 || $102,796.24 || $109,751.47 || $84,000.00 || $103,571.12 || 0.75%
|-
! 14
| $111,921.25 || $111,921.25 || $111,921.25 || $120,141.53 || $90,000.00 || $112,907.56 || 0.88%
|-
! 15
| $121,323.66 || $121,323.66 || $121,323.66 || $130,947.19 || $96,000.00 || $122,559.86 || 1.02%
|-
! 16
| $131,011.90 || $131,011.90 || $131,011.90 || $142,185.07 || $102,000.00 || $132,540.66 || 1.17%
|-
! 17
| $140,994.66 || $140,994.66 || $140,994.66 || $153,872.48 || $108,000.00 || $142,863.08 || 1.33%
|-
! 18
| $151,280.89 || $151,280.89 || $151,280.89 || $166,027.38 || $114,000.00 || $153,540.81 || 1.49%
|-
! 19
| $161,879.83 || $161,879.83 || $161,879.83 || $178,668.47 || $120,000.00 || $164,588.04 || 1.67%
|-
! 20
| $172,800.98 || $172,800.98 || $172,800.98 || $191,815.21 || $126,000.00 || $176,019.56 || 1.86%
|-
! 21
| $184,054.13 || $184,054.13 || $184,054.13 || $205,487.82 || $132,000.00 || $187,850.74 || 2.06%
|-
! 22
| $195,649.38 || $195,649.38 || $195,649.38 || $219,707.33 || $138,000.00 || $200,097.57 || 2.27%
|-
! 23
| $207,597.12 || $207,597.12 || $207,597.12 || $234,495.62 || $144,000.00 || $212,776.67 || 2.50%
|-
! 24
| $219,908.07 || $219,908.07 || $219,908.07 || $249,875.45 || $150,000.00 || $225,905.34 || 2.73%
|-
! 25
| $232,593.27 || $232,593.27 || $232,593.27 || $265,870.47 || $156,000.00 || $239,501.56 || 2.97%
|-
! 26
| $245,664.11 || $245,664.11 || $245,664.11 || $282,505.29 || $162,000.00 || $253,584.02 || 3.22%
|-
! 27
| $259,132.30 || $259,132.30 || $259,132.30 || $299,805.50 || $168,000.00 || $268,172.18 || 3.49%
|-
! 28
| $273,009.92 || $273,009.92 || $273,009.92 || $317,797.72 || $174,000.00 || $283,286.27 || 3.76%
|-
! 29
| $287,309.42 || $287,309.42 || $287,309.42 || $336,509.63 || $180,000.00 || $298,947.32 || 4.05%
|-
! 30
| $302,043.63 || $302,043.63 || $302,043.63 || $355,970.01 || $186,000.00 || $315,177.21 || 4.35%
|-
! 31
| $317,225.76 || $317,225.76 || $317,225.76 || $376,208.81 || $192,000.00 || $331,998.70 || 4.66%
|-
! 32
| $332,869.42 || $332,869.42 || $332,869.42 || $397,257.16 || $198,000.00 || $349,435.45 || 4.98%
|-
! 33
| $348,988.65 || $348,988.65 || $348,988.65 || $419,147.45 || $204,000.00 || $367,512.06 || 5.31%
|-
! 34
| $365,597.90 || $365,597.90 || $365,597.90 || $441,913.35 || $210,000.00 || $386,254.15 || 5.65%
|-
! 35
| $382,712.08 || $382,712.08 || $382,712.08 || $465,589.88 || $216,000.00 || $405,688.31 || 6.00%
|-
! 36
| $400,346.53 || $400,346.53 || $400,346.53 || $490,213.48 || $222,000.00 || $425,842.24 || 6.37%
|-
! 37
| $418,517.06 || $418,517.06 || $418,517.06 || $515,822.02 || $228,000.00 || $446,744.73 || 6.74%
|-
! 38
| $437,239.98 || $437,239.98 || $437,239.98 || $542,454.90 || $234,000.00 || $468,425.72 || 7.13%
|-
! 39
| $456,532.08 || $456,532.08 || $456,532.08 || $570,153.09 || $240,000.00 || $490,916.35 || 7.53%
|-
! 40
| $476,410.65 || $476,410.65 || $476,410.65 || $598,959.22 || $246,000.00 || $514,249.01 || 7.94%
|}

====REIT====

* Total Return: 6%
* Yield: 6%
* Qualified Yield: 0%

{| class="wikitable collapsible autocollapse" style="text-align:right"
! Year !! Taxable Balance !! Taxable Basis !! Taxable After-Tax !! ND tIRA Balance !! ND tIRA Basis !! ND tIRA After-Tax !! ND tIRA Advantage
|-
! 0
| $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || $6,000.00 || 0.00%
|-
! 1
| $12,273.60 || $12,273.60 || $12,273.60 || $12,360.00 || $12,000.00 || $12,273.60 || 0.00%
|-
! 2
| $18,833.28 || $18,833.28 || $18,833.28 || $19,101.60 || $18,000.00 || $18,837.22 || 0.02%
|-
! 3
| $25,692.07 || $25,692.07 || $25,692.07 || $26,247.70 || $24,000.00 || $25,708.25 || 0.06%
|-
! 4
| $32,863.63 || $32,863.63 || $32,863.63 || $33,822.56 || $30,000.00 || $32,905.14 || 0.13%
|-
! 5
| $40,362.21 || $40,362.21 || $40,362.21 || $41,851.91 || $36,000.00 || $40,447.45 || 0.21%
|-
! 6
| $48,202.73 || $48,202.73 || $48,202.73 || $50,363.03 || $42,000.00 || $48,355.90 || 0.32%
|-
! 7
| $56,400.78 || $56,400.78 || $56,400.78 || $59,384.81 || $48,000.00 || $56,652.45 || 0.45%
|-
! 8
| $64,972.65 || $64,972.65 || $64,972.65 || $68,947.90 || $54,000.00 || $65,360.40 || 0.60%
|-
! 9
| $73,935.40 || $73,935.40 || $73,935.40 || $79,084.77 || $60,000.00 || $74,504.42 || 0.77%
|-
! 10
| $83,306.86 || $83,306.86 || $83,306.86 || $89,829.86 || $66,000.00 || $84,110.69 || 0.96%
|-
! 11
| $93,105.65 || $93,105.65 || $93,105.65 || $101,219.65 || $72,000.00 || $94,206.93 || 1.18%
|-
! 12
| $103,351.27 || $103,351.27 || $103,351.27 || $113,292.83 || $78,000.00 || $104,822.55 || 1.42%
|-
! 13
| $114,064.09 || $114,064.09 || $114,064.09 || $126,090.40 || $84,000.00 || $115,988.70 || 1.69%
|-
! 14
| $125,265.41 || $125,265.41 || $125,265.41 || $139,655.82 || $90,000.00 || $127,738.42 || 1.97%
|-
! 15
| $136,977.51 || $136,977.51 || $136,977.51 || $154,035.17 || $96,000.00 || $140,106.73 || 2.28%
|-
! 16
| $149,223.69 || $149,223.69 || $149,223.69 || $169,277.28 || $102,000.00 || $153,130.73 || 2.62%
|-
! 17
| $162,028.29 || $162,028.29 || $162,028.29 || $185,433.92 || $108,000.00 || $166,849.78 || 2.98%
|-
! 18
| $175,416.78 || $175,416.78 || $175,416.78 || $202,559.95 || $114,000.00 || $181,305.56 || 3.36%
|-
! 19
| $189,415.78 || $189,415.78 || $189,415.78 || $220,713.55 || $120,000.00 || $196,542.30 || 3.76%
|-
! 20
| $204,053.14 || $204,053.14 || $204,053.14 || $239,956.36 || $126,000.00 || $212,606.83 || 4.19%
|-
! 21
| $219,357.96 || $219,357.96 || $219,357.96 || $260,353.74 || $132,000.00 || $229,548.84 || 4.65%
|-
! 22
| $235,360.69 || $235,360.69 || $235,360.69 || $281,974.97 || $138,000.00 || $247,420.97 || 5.12%
|-
! 23
| $252,093.13 || $252,093.13 || $252,093.13 || $304,893.46 || $144,000.00 || $266,279.03 || 5.63%
|-
! 24
| $269,588.58 || $269,588.58 || $269,588.58 || $329,187.07 || $150,000.00 || $286,182.17 || 6.16%
|-
! 25
| $287,881.82 || $287,881.82 || $287,881.82 || $354,938.30 || $156,000.00 || $307,193.11 || 6.71%
|-
! 26
| $307,009.23 || $307,009.23 || $307,009.23 || $382,234.59 || $162,000.00 || $329,378.29 || 7.29%
|-
! 27
| $327,008.85 || $327,008.85 || $327,008.85 || $411,168.67 || $168,000.00 || $352,808.19 || 7.89%
|-
! 28
| $347,920.46 || $347,920.46 || $347,920.46 || $441,838.79 || $174,000.00 || $377,557.48 || 8.52%
|-
! 29
| $369,785.63 || $369,785.63 || $369,785.63 || $474,349.12 || $180,000.00 || $403,705.33 || 9.17%
|-
! 30
| $392,647.85 || $392,647.85 || $392,647.85 || $508,810.06 || $186,000.00 || $431,335.65 || 9.85%
|-
! 31
| $416,552.59 || $416,552.59 || $416,552.59 || $545,338.67 || $192,000.00 || $460,537.39 || 10.56%
|-
! 32
| $441,547.39 || $441,547.39 || $441,547.39 || $584,058.99 || $198,000.00 || $491,404.83 || 11.29%
|-
! 33
| $467,681.95 || $467,681.95 || $467,681.95 || $625,102.53 || $204,000.00 || $524,037.92 || 12.05%
|-
! 34
| $495,008.25 || $495,008.25 || $495,008.25 || $668,608.68 || $210,000.00 || $558,542.60 || 12.84%
|-
! 35
| $523,580.63 || $523,580.63 || $523,580.63 || $714,725.20 || $216,000.00 || $595,031.15 || 13.65%
|-
! 36
| $553,455.90 || $553,455.90 || $553,455.90 || $763,608.71 || $222,000.00 || $633,622.62 || 14.48%
|-
! 37
| $584,693.49 || $584,693.49 || $584,693.49 || $815,425.23 || $228,000.00 || $674,443.18 || 15.35%
|-
! 38
| $617,355.52 || $617,355.52 || $617,355.52 || $870,350.75 || $234,000.00 || $717,626.57 || 16.24%
|-
! 39
| $651,506.93 || $651,506.93 || $651,506.93 || $928,571.79 || $240,000.00 || $763,314.56 || 17.16%
|-
! 40
| $687,215.64 || $687,215.64 || $687,215.64 || $990,286.10 || $246,000.00 || $811,657.44 || 18.11%
|}

==References==
{{Reflist|30em}}

==External links==
*[https://www.irs.gov/publications/p590a/ Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)]
*[https://www.irs.gov/publications/p590b/ Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)]
*[http://www.irs.gov/pub/irs-pdf/f8606.pdf Form 8606 Nondeductible IRAs]
*[http://www.irs.gov/instructions/i8606/index.html Instructions for Form 8606 Nondeductible IRAs]
*[https://personal.vanguard.com/us/whatweoffer/ira/whichira?Link=facet Traditional vs Roth]
*[https://www.fidelity.com/building-savings/learn-about-iras/required-minimum-distributions/qcds Qualified Charitable Distributions (QCDs)]
*{{Forum post| t = 300681| title = Proposed new Required Minimum Distribution (RMD) wiki page | author = fyre4ce | date = Jan 14, 2020}}. Includes discussion of non-deductible traditional IRA.

{{Bogleheads retirement planning start-up kit}}
{{Retirement accounts}}
{{Managing your IRA}}

[[Category: IRAs]]
[[Category:Pages requiring annual tax updates]]