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Started By
Message
Poodlebrain, a tax question for you
Posted on 2/13/10 at 11:02 am
Posted on 2/13/10 at 11:02 am
My daughter began her career as a school teacher last August. It was her only job during 2009 following her college graduation so her income was less than $16,000 for 2009. As a public school teacher, she was enrolled into the teacher's retirement system for Louisiana.
All during her college days as she worked different part-time jobs I gave her money to fund a Roth IRA for herself for the maximum amount she could contribute each year.
My question is, can she contribute into her Roth IRA for 2009?
From my research, it is pretty clear to me she can not contribute to a deductible IRA due to her participation in a retirement plan, but I am frustrated in my efforts trying to determine if she can contribute into a non-deductible (Roth) IRA.
Thanks much!
All during her college days as she worked different part-time jobs I gave her money to fund a Roth IRA for herself for the maximum amount she could contribute each year.
My question is, can she contribute into her Roth IRA for 2009?
From my research, it is pretty clear to me she can not contribute to a deductible IRA due to her participation in a retirement plan, but I am frustrated in my efforts trying to determine if she can contribute into a non-deductible (Roth) IRA.
Thanks much!
2
Posted on 2/13/10 at 11:42 am to LSURussian
Pics of the daughter?
Just kidding. Yes she can contribute to her Roth
Just kidding. Yes she can contribute to her Roth
Posted on 2/13/10 at 11:54 am to LSUchuck
quote:
Pics of the daughter?
Posted on 2/13/10 at 11:58 am to LSURussian
Russian women wear bikinis in the classroom. It's a proven fact.
Posted on 2/13/10 at 12:03 pm to foshizzle
Is this better?
Posted on 2/13/10 at 12:18 pm to LSURussian
The simple answer is, yes. Your daughter should be able to contribute up to $5,000 to a Roth IRA for 2009.
Posted on 2/13/10 at 12:19 pm to Poodlebrain
Posted on 2/13/10 at 1:35 pm to LSURussian
quote:
Is this better?
Hm. Let's just say you shouldn't start any babe threads on the OT. She's perfectly fine but the picture quality can be improved ...
Anyway, I think she can contribute just fine. I have a 401(k) (which counts as a "company retirement plan") but contribute to a Roth with no problems. However, the details of her plan may or may not differ.
This post was edited on 2/13/10 at 1:37 pm
Posted on 2/16/10 at 2:44 pm to foshizzle
She can contribute to either a Roth or Traditional IRA while also funding a company sponsored 401(k). However income limits will phase out her contribution amounts. @ $16k she will not be affected by a phaseout.
Posted on 2/16/10 at 3:17 pm to ChesterCopperpot
Dealing with this problem myself...wife is a teacher and covered by state retirement, I contribute $5000 toward a traditional IRA for each one of us, but this year my deduction is completely phased out. Don't get the tax benefit on the front end (contributions), then I get taxed on the back end (distributions)
Thanks congress
Thanks congress
Posted on 2/16/10 at 3:19 pm to slinger1317
quote:But can't you open a Roth for her? You can't deduct it from current income but the distributions are tax free........for now at least.
I contribute $5000 toward a traditional IRA for each one of us, but this year my deduction is completely phased out. Don't get the tax benefit on the front end (contributions), then I get taxed on the back end (distributions)
Posted on 2/17/10 at 12:15 am to slinger1317
quote:
Don't get the tax benefit on the front end (contributions), then I get taxed on the back end (distributions)
You do not get taxed on distributions of your nondeductible contributions to a traditional IRA. You can track your basis in the IRA using Form 8606.
Posted on 2/17/10 at 1:06 am to Poodlebrain
quote:
You do not get taxed on distributions of your nondeductible contributions to a traditional IRA. You can track your basis in the IRA using Form 8606.
Nerd.
But it does raise a question - it makes sense not to get taxed on distributions of nondeductible contributions, but if so why bother with the paperwork? Just establish a regular brokerage account and be done with it. Or am I missing something?
Posted on 2/17/10 at 1:17 am to foshizzle
All of the income earned by the IRA is still tax deferred. So there is the time value of money advantage to making nondeductible contributions (at least there was before the creation of Roth IRAs), and there is the possibility of being in a lower tax bracket when distributions of the tax-deferred income and deductible contributions are taken.
Posted on 2/17/10 at 7:59 am to LSURussian
quote:
But can't you open a Roth for her? You can't deduct it from current income but the distributions are tax free........for now at least.
That was what I wanted to do, but the income restrictions for a Roth are the same as if your spouse is covered by an employer sponsored plan. ($167,000 is where that phase out begins, I believe Roth is capped at around $165,000)
So there is a way to track my contributions to a traditional, and when it is time to receive distributions, I won't pay taxes until I have received the total amount of my contributions? That will help ease the pain some.
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