I have a number of clients that want to save every dollar they can for their retirement. I don’t see anything wrong with this. Most of my clients also try to manage their tax bill to the best of what the law allows. These two desires often take the form of Nondeductible IRA contributions that are then converted to a Roth IRA. By combining these two practices, my clients are saving more for their retirement, then picking when they pay tax on those dollars.
When you convert Tradition IRA money, be it deductible or not, you pay tax on the amount you convert in that year. Currently, Roth accounts grow with tax free withdrawals. Along comes the Presidential budget for 2017. The President has proposed that Nondeductible IRA contributions be blocked from conversion to a Roth IRA. This is being called a “loophole closer.” This can be a profitable retirement savings plan, so if you are considering this tactic, do it now.

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