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Roth IRA income limit
Posted on 11/18/20 at 11:49 am
Posted on 11/18/20 at 11:49 am
My wife’s salary fluctuates due to bonuses and we are starting to get close to the Roth IRA income limits, but won’t know until the end of the year if we are allowed to contribute or not. My question is does 2020 income determine 2020 or 2021 contribution limits?
4
Posted on 11/18/20 at 11:51 am to Simon Gruber
2020
Posted on 11/18/20 at 11:53 am to Simon Gruber
Just do the backdoor ROTH method which will avoid this whole issue.
It may be too late this year since you may have already been contributing past your direct contribution maximum but do that going forward.
It may be too late this year since you may have already been contributing past your direct contribution maximum but do that going forward.
This post was edited on 11/18/20 at 11:55 am
Posted on 11/18/20 at 12:18 pm to Simon Gruber
You can either do a backdoor or file an 8606 to reclassify it as a non deductible contribution.
The tricky part with backdoor is you have end up with the pro rata rules which take into account all non Roth monies. You can’t pick and choose which dollars. It’s a percentage or you can do all at once, which might not make sense. It’s a PITA
The tricky part with backdoor is you have end up with the pro rata rules which take into account all non Roth monies. You can’t pick and choose which dollars. It’s a percentage or you can do all at once, which might not make sense. It’s a PITA
Posted on 11/18/20 at 12:34 pm to Simon Gruber
You have until tax filing deadline the next year to make a contribution for the previous year.
You can wait to see what the actual numbers are and then make the contribution in Jan- Feb of 2021 for 2020 tax year.
You can wait to see what the actual numbers are and then make the contribution in Jan- Feb of 2021 for 2020 tax year.
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