The new fad in IRA contributions is for taxpayers who have too much income to make a Roth IRA contribution to make a non-deductible contribution to a traditional IRA, then convert this to a Roth IRA.  A loophole in the tax code (for now) allows this conversion to a Roth without income tax consequences.  But be careful!  If you already have traditional IRA accounts, trying to make this conversion can have unintended tax consequences, because all traditional IRA balances (including non-deductible contributions) are all lumped together when making distributions or conversions to Roth IRAs.  See this posting in MarketWatch by Dan Moisand to get more details on this:

www.marketwatch.com/story/why-you-cant-convert-a-nondeductible-ira-into-a-roth-ira-2015-06-05

So say you have $45000 in traditional IRAs, of which $25000 is contributions and $20000 is earnings.  You make a $5000 non-deductible IRA contribution, which you then convert to a Roth IRA.  No earnings to pay tax on, right?  Wrong; you now have $50000 in traditional IRAs and only a $5000 basis (because you took a $25000 tax deduction for the original IRAs).  So you owe tax on $4500 of the $5000 ‘non-deductible’ contribution.  This will continue each time you try this conversion technique.  I am bringing this up as an FYI so you plan for this before using this idea.

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