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Bond funds in IRA

Wanted to invest some new income in a simple 60:40 allocation. For the bond portion, I am wondering if it can be done in a new IRA to reduce taxes due to distributions/interest income. This won't be pre-tax (not eligible due to my current income), so no benefit in reducing current taxes due to deductions, but it should grow tax-sheltered. Are there any limitations on how much can be put in such IRA?


  • Contribution limits are generally the same for T-IRAs and for Roths: $6K (or $7K for those age 50 and above), not to exceed your compensation. That's a combined limit, i.e. you can split the amount allowed between Roth and Traditional.

    There is also an income cap on Roth contributions. Here's the IRS table:

    Should your Roth contribution be capped, you are still free to contribute the remainder of the allowable amount into a traditional IRA, albeit without taking a deduction. For example, if you are allowed to make $7K in contributions, but your Roth contribution is capped at $3K, you could make a nondeductible contribution of $4K to your traditional IRA.

    It doesn't matter whether you create a separate T-IRA for nondeductible contributions. They are all aggregated for tax purposes. You are making a commitment to keep track of your nondeductible contributions for life, or until you deplete all your traditional IRAs. The form is easy, but you're still stuck with it for life.
  • Thank you Mark. As always, clear and to the point!
  • Roth IRA. As long as you meet the income limits , you can also contribute up to $6,000 (or $7,000 if you're turning 50 or older this year) to a Roth IRA. (If you exceed the income limits, you can still use a "backdoor " approach to contribute.) As with the Roth 401(k), all withdrawals from the Roth IRA become tax-free after you've had the account for at least 5 years and you're over age 59 ½. FROM FORBES
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