TIRA: converted and Direct contributions
I have an IRA with monies from a roll over of an employer retirement account in 1996. Not knowing how the IRA rules (only that I needed to contribute yearly) I have been contributing the maximum for the past 11 years. This has always been a non-deductible account. I calculate that my direct contributions come to about 6-7% of the total.
I have considered opening a new IRA for future contributions (47yo now) but after reading some forum replies I now wonder if I should continue contributions to raise the percentage of after tax contributions so that future withdrawls might have a better tax advantage.
What are the pro’s and con’ in this situation?
Permalink Submitted by Al Fry on Wed, 2007-11-07 19:30
From a tax leverage standpoint, it shouldn’t make any difference. Whether you have 1 IRA or 27 IRAs, from the IRS’s view you only have one. In other words, the cost basis is spread pro-rata among all IRAs one owns. Hopefully, you’ve been filing IRS Form 8606s for each year you made non-deductible contributions.