nondeductible contribution
A nondeductible contribution is money you put into a traditional IRA but cannot subtract from your taxable income that year. You still pay normal income tax on it upfront, which matters later when you convert it.
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Words beside it
- Catch up contribution
Extra you may put into retirement accounts once you reach 50.
- contribution
The money you actually put into an account like an IRA in a given year. The government sets a maximum dollar amount you are allowed to add each year.
- contribution limit
The maximum dollar amount the government allows you to put into a certain account in a given year.
- Contribution margin
Price minus variable cost per unit. What each sale contributes toward fixed costs and profit.
- direct contribution
A direct contribution is when you put money straight into an account without any extra steps in between. For example, putting money right into a Roth IRA without converting it from another account first.
- nondeductible
This describes money you put into an account that you already paid taxes on, so you cannot subtract it from your taxable income that year. It matters because it affects how much tax you owe later when you take the money out.
- pretax contribution
Money you put into an account before the government counts it as income, which lowers the amount of your paycheck that gets taxed right away.
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