Can you explain the benefits (if any) of contributing to a traditional IRA if I make too much to deduct it?

Question

Important: I need information in the situation where I make too much for it to be tax deductible (or to contribute to a Roth)

Answer 1

Contribute to a non-deductible IRA. Get no deduction when your money goes in. When the money comes out, pay tax on the investment earnings.

Contribute to a Roth IRA. Get no deduction when your money goes in. When your money comes out, it's all tax-free.

There are different benefits to both. The Roth IRA allows you to continue to contribute after age 70 1/2. The traditional IRA allows you to take tax-free distributions for first time home purchase and higher education expenses.

Answer 2

It grows tax-free, so you're not paying tax every year on such things as dividends and interest, or capital gains distributions if it's in a mutual fund.

You still pay taxes on it when you take the money out, but you get the advantage of compounding on the money you didn't have to pay out for taxes in the meantime.

Answer 3

IRAs are retirement accounts. It will help provide for you when you are retired.