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A nondeductible IRA is a retirement plan you fund with after-tax dollars. You can’t deduct contributions from your income taxes as you would with a traditional IRA. However, your non-deductible contributions grow tax-free. Many people turn to these options because their income is too high for the IRS to let them make tax-deductible contributions to a regular IRA. Here’s what you should know about a non-deductible IRA, so you can determine whether one is right for you.
A financial advisor can also help guide you in making retirement planning decisions for your situation.
What Are the Benefits of a Non-Deductible IRA?
Most people turn to non-deductible IRAs because certain circumstances disqualify them from making tax-deductible contributions to traditional IRAs, but they still want access to a reliable retirement savings vehicle.
For instance, any capital gains and dividends your contributions produce won’t be taxed while invested in the account. In some cases, all or a portion of the money you withdraw would be tax-free. That’s because the government can’t tax your retirement savings twice. More on that later, but first, let’s cover the rules to see if you’re eligible to make non-deductible IRA contributions. This will also help you decide if it is a good option for you.
Your eligibility to deduct some or all of your IRA contributions from federal income tax depends on your income, tax-filing status, and whether you have access to a workplace retirement plan (even if you don’t participate in the plan). Whether your spouse participates in an employer-sponsored retirement plan such as a 401(k) can affect your eligibility as well.
Non-Deductible IRA Rules and Eligibility Requirements
For single tax filers and heads of household, eligibility to make tax-deductible contributions to a traditional IRA depends on their modified adjusted gross income (MAGI). Once it exceeds a certain point, they can deduct only a portion of the contributions they make until their income reaches a top limit. At that point, they can’t deduct any contributions from your income taxes.
The IRS sets these levels each year. In 2026, MAGI for singles and heads of household with a workplace plan phases out between $81,000 and $91,000. (And they can’t deduct any contributions once income surpasses $91,000.)
If you’re married and filing jointly, your eligibility to make tax-deductible contributions depends on your income, and whether one of you participates in a workplace retirement plan.
To simplify, let’s summarize the 2026 rules based on who has a workplace retirement plan below. When income exceeds the first number, only a portion of contributions can be tax deductible. Once it surpasses the second number, you can’t deduct anything.
- You have a workplace retirement plan: $129,000 – $149,000
- You don’t have one, but your spouse does: $242,000 – $252,000
For a fuller comparison, the tables below show the IRA deduction limits by MAGI ranges for taxpayers with and without retirement plans as set by the IRS.
2026 IRA Deduction Limits
| Filing Status | MAGI With Retirement Plan | MAGI Without Retirement Plan |
|---|---|---|
| Single or Head of Household | $81,000 to $91,000 | No range limit (full deduction can be made up to the $7,000 contribution limit). |
| Married Filing Jointly or Qualifying Widow | $129,000 to $149,000 | $242,000 to $252,000 |
| Married Filing Separately | Up to $10,000 | Up to $10,000 |
Meanwhile, here are the income limits for making tax-deductible contributions to an IRA in 2025.
2025 IRA Deduction Limits
| Filing Status | MAGI With Retirement Plan | MAGI Without Retirement Plan |
|---|---|---|
| Single or Head of Household | $79,000 to $89,000 | No range limit (full deduction can be made up to the $7,000 contribution limit). |
| Married Filing Jointly or Qualifying Widow | $126,000 to $146,000 | $236,000 to $246,000 |
| Married Filing Separately | Up to $10,000 | Up to $10,000 |
Non-Deductible IRAs and Backdoor Roth Conversion
Often, a non-deductible IRA is just a layover on the flight from taxable income to a Roth IRA. Like traditional IRAs, Roth IRAs have income limits.
For 2026, single filers can no longer contribute to a Roth IRA if their income is over $168,000 (up from $165,000 in 2025), while married couples filing jointly lose that ability when their income reaches $252,000 (up from $246,000).
This is why some high-income savers choose to execute a backdoor Roth IRA. If your income leaves you locked out of the Roth option, you can simply contribute to a non-deductible IRA and then convert that IRA to a Roth IRA.
One caveat is that the backdoor Roth is not necessarily 100% tax-free. Say you’ve made both deductible and non-deductible contributions to IRAs over the years. If you now want to convert your non-deductible IRA to a Roth, you’d have to pay income tax on a portion of this. To figure out your tax liability, take your after-tax contributions and divide them by the total value of all your IRAs.
If you have $5,000 worth of non-deductible contributions and $15,000 worth of deductible contributions from back when your income allowed you to contribute to a deductible IRA, only 25% (5,000/20,000) of your backdoor Roth conversion will be tax-free. So 75% of the money you convert is taxable.
As you can see, the backdoor Roth conversion can be as tricky as it is rewarding. It might be a good idea to seek the help of a financial advisor. That way, you can make sure you follow all the rules and avoid pitfalls that may be waiting around the corner.
Building savings across multiple retirement accounts can create flexibility later. Use SmartAsset’s retirement calculator to estimate how those assets could support your retirement timeline.
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To estimate how much you may need to save for retirement, we begin by calculating how much you're expected to spend over the course of your retirement. This includes estimating the income you'll need based on your lifestyle preferences, then factoring in how many years you may spend in retirement. We assume a lifespan of 95 by default, though you can adjust it after your calculation is complete.
Once we have a clearer view of your total retirement needs, we use our models to evaluate your existing and future resources. This includes estimating retirement income from Social Security and the impact of current retirement plans, pensions and other accounts. For additional inputs and a comprehensive retirement plan, please see our full Retirement Calculator.
Assumptions
Lifespan: We assume you will live to 95. We stop the analysis there, regardless of your spouse's age.
Retirement accounts: We automatically distribute your future savings optimally among different retirement accounts. We assume that the IRS contribution limits for your retirement accounts increase with inflation.
Social Security: We estimate your Social Security income using your stated annual income and assuming you have worked and paid Social Security taxes for 35 years prior to retirement. Our estimate is sensitive to penalties for early retirement and credits for delaying claiming Social Security benefits.
Return on savings: We assume the percentage return on your savings differs by whether you're pre- or post-retirement and by account type, with a distinction between investment accounts and savings accounts. This assumption does not account for market volatility or investment losses and assumes positive growth over time. All investing involves risk, including the possible loss of principal.
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Considerations of a Non-Deductible IRA
Non-deductible IRAs that are promptly converted to Roth IRAs can be great. Permanent non-deductible IRAs, on the other hand, have some risks. One of the largest risks is that you may have to pay additional taxes if you don’t keep deductible and non-deductible contributions separate. That’s because once you’ve blended deductible and non-deductible contributions, it’s hard to keep the two straight.
It is possible, though, so long as you keep track of your contributions. You’ll then have to divide your non-deductible contributions by the total contributions to all IRAs in your name to get a percentage that represents your after-tax contributions. You don’t have to pay federal taxes on this percentage of the growth in the account when you start taking deductions. Your after-tax contributions to IRAs are your “basis.”
You can (and should) file Form 8606 for each year that you make after-tax contributions to a non-deductible IRA. That way, you’re giving a record of your contributions so the government can calculate your taxes in retirement.
Remember that when you start taking distributions in retirement, you’ll have to pay taxes on that money. These will be according to your income tax bracket. If you’re a high earner, that rate will be higher. You might be better off parking your money in a taxable account that uses tax-loss harvesting. Why? Because the tax rate on long-term capital gains is typically lower than the income tax rate for a high-income saver.
Bottom Line
Say you’re a high-income saver looking to maximize your tax advantages. Contributing to a non-deductible IRA on your way to a backdoor Roth conversion could be a great way to protect some or all of your retirement savings from taxation. But if you’re thinking about parking your money in a nondeductible IRA for the long term, it’s important to weigh the risks.
Tips for Getting Retirement Ready
- If you’re planning for retirement, a financial advisor may be able to help you get ready. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Figure out how much you’ll need to save to retire comfortably. An easy way to get ahead in saving for retirement is by taking advantage of employer 401(k) matching.
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