After Tax Contributions to IRA

Hello All,

My wife has approximately 45K in a SIMPLE IRA from a previous employer. She started a new job three years ago that has no retirement benefits so we opened a ROTH for her and have contributed 6K (she is 45) each of the last three years. I max out my 457 contributions from my city government employee plan and I have a pension plan also. This year and most likely in the coming years, we have exceeded the income eligibility requirements to contribute to her ROTH. We really like have the non-taxable option for future retirement needs but the ROTH is most likely not going to be an option for us going forward. We have considered converting her SIMPLE IRA into her ROTH but have not done so (still thinking that through).

We still have money we’d like to invest but the ROTH being off the table is killing me. We have considered opening up a traditional IRA for her and either doing a backdoor ROTH, which for now, is an option but might not be in the future, or contributing already taxed money to the traditional IRA and using form 8606 each year to report this already taxed contribution to her new IRA. We off course would not deduct this contribution each year from our taxes and also allows use to work around our married, filing jointly income limit road block. I’m certain due to pro-rata we would have to pay taxes on the back door ROTH option based on her 45K SIMPLE balance and the new, already taxed contributions.

My question is this…if we contribute already taxed money to her traditional IRA each year and use form 8606 isn’t this essentially a ROTH? I never foresee contributing pre-tax dollars to her traditional IRA. I also know there is different withdrawal restrictions between the ROTH and tradiontal IRA that must be considered. I’ll wrap this long-winded post up by asking if, let say, from this point going forward we always contributed after tax money to her traditional IRA and reported the contributions appropriately and never took the tax benefit deduction, when she retires will all that money be tax free? Again, essentially like a ROTH?

Do you have access to a 401k in addition to your 457?

No access to a 401K. Just the 457.