My wife and I both work and both our employers offer 401K plans. When I first started my job 4 years ago they had a policy that required you to work for 1 year before you could start making contributions to the 401K plan. My wife's company was just 3 months. Therefore, I decided to open up a Roth IRA for myself and I had my wife open one for herself. I'm looking into trying to increase our contributions so we can try to max out all these retirement accounts next year. We file Joint returns and our MAGI is nearing the $193K where Roth contributions begin to phase out.
When that happens my plan was simply to just open up traditional IRAs for my wife and myself and enjoy the $6000 (2019 value) pre-tax contribution for each account. However, during my research I discovered that if your employer has a 401k plan then you can't deduct that $6000 if your MAGI is greater than $123,000. https://www.irs.gov/retirement-plans/2019-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work
Now I'm very confused and with this information at hand I have a number of quesitons:
1.) If a couple filing jointly cannot deduct the $6,000 for each Traditional IRA when they file taxes then is there even a reason to contribute to a Traditional IRA since you've lost the tax incentive? At this point I'd assume contributing to a Roth is the clear choice since you're still allowed to do that until your MAGI is greater than $203,000 and all investment gains are tax free. Otherwise the the Traditional IRA doesn't allow you to deduct your contribution AND your paying the full tax rate on that investment and its gains when you withdraw in retirement.
1b.) My understanding is that during retirement when you withdraw from a Traditional IRA, you report all of that money as income and the IRS will tax you according to whatever the tax tables are at that time. If you contributed to a Traditional IRA but weren't able to deduct the $6,000 in taxes then won't they be taxing you twice for the initial $6,000 investment? Once in the year you initially made the money and again when you withdraw it?
2.) When the day comes that my wife and I exceed the Roth IRA MAGI limit, is there any advantage to opening up a Traditional IRA? Or should I just start investing that money into a separate non-retirement investment account where that $6000 will be taxed at the current rate the year we make it and all investment gains will be taxed at capital gains rates (assuming obviously all gains are considered long term gains)?