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Started By
Message
Contribute to an IRA or not
Posted on 6/4/13 at 1:23 pm
Posted on 6/4/13 at 1:23 pm
My wife and I file our taxes jointly, and our AGI is at a point where we cannot contribute to a Roth IRA. We are also beyond the limit where we can qualify for traditional IRA tax deductions.
However, there is no AGI limit on traditional IRA contributions.
So, should we still contribute to a traditional IRA even if we can't receive any tax benefit for doing so? Is there any benefit to this situation?
However, there is no AGI limit on traditional IRA contributions.
So, should we still contribute to a traditional IRA even if we can't receive any tax benefit for doing so? Is there any benefit to this situation?
8
Posted on 6/4/13 at 1:38 pm to Spirit of Dunson
quote:
Is there any benefit to this situation?
Tax deferred growth. That's kind of a big deal.
Posted on 6/4/13 at 1:39 pm to Spirit of Dunson
Max it out as much as you can. Your profits are not taxed until you pull the money out.
Posted on 6/4/13 at 1:40 pm to Broke
quote:Even if my effective tax rate is going up? Or is the idea that you only withdraw when you are done working and your AGI is nill?
ax deferred growth.
What if I never quit working?
Posted on 6/4/13 at 1:40 pm to Spirit of Dunson
Do you have a company sponsored 401(k)?
Posted on 6/4/13 at 1:42 pm to TheDiesel
quote:yup.
Do you have a company sponsored 401(k)?
Posted on 6/4/13 at 1:44 pm to Spirit of Dunson
Doesn't that count towards your IRA maximum?
Posted on 6/4/13 at 1:45 pm to TheDiesel
quote:nope. it does change your phase out amount for tax deductions, but has no effect on the contribution limits.
Doesn't that count towards your IRA maximum?
Posted on 6/4/13 at 1:49 pm to Spirit of Dunson
If you plan on working for a long while IRA contributions are still your goal.
If I were in your shoes though, I would consider starting to throw money in tax efficient holdings in a taxable account in order to open the door to retire early
If I were in your shoes though, I would consider starting to throw money in tax efficient holdings in a taxable account in order to open the door to retire early
Posted on 6/4/13 at 1:52 pm to Spirit of Dunson
Contribute to a money market in a nondeductible TIRA, then convert to Roth IRA with no taxes owed and tax free withdrawals down the road = $$$$$$$.
Posted on 6/4/13 at 1:53 pm to Spirit of Dunson
quote:
Even if my effective tax rate is going up? Or is the idea that you only withdraw when you are done working and your AGI is nill?
Yeah. The theory is that you are in a lower bracket once you retire.
quote:
What if I never quit working?
Then stop putting into a retirement account. No need.
Posted on 6/4/13 at 1:54 pm to Broke
quote:genius.
Then stop putting into a retirement account. No need.
THANKS!
Posted on 6/4/13 at 2:14 pm to Spirit of Dunson
I get paid big bucks for this. That one, my friend, was on the house.
Posted on 6/4/13 at 2:30 pm to Spirit of Dunson
quote:
My wife and I file our taxes jointly, and our AGI is at a point where we cannot contribute to a Roth IRA. We are also beyond the limit where we can qualify for traditional IRA tax deductions.
Same here but I still put money in the IRA for another pile of money in the future.
As an aside I told my wife that I want to take home a grand a month more and I have to pay myself about $2k more gross to take home $1k. Sucks.
Posted on 6/4/13 at 2:34 pm to VABuckeye
quote:I'll probably do the same just for shits and grins.
I still put money in the IRA for another pile of money in the future.
Posted on 6/4/13 at 6:41 pm to Broke
quote:
The theory is that you are in a lower bracket once you retire.
Why is that? Aren't withdrawals treated as income? And what about capital gains?
Posted on 6/4/13 at 6:59 pm to Spirit of Dunson
quote:
What if I never quit working?
Set up an educational trust for the kids.
Or you can send me the money, I'll spend it on quality hookers and blow and will send you pics.
Posted on 6/4/13 at 7:12 pm to acgeaux129
quote:
Why is that? Aren't withdrawals treated as income?
Yes but most people dont pull as much as they made in a given year.
quote:
And what about capital gains?
Does not apply to tax advantaged accounts.
Posted on 6/4/13 at 9:09 pm to Volvagia
quote:
Does not apply to tax advantaged accounts.
Didn't realize for Traditional Roth. Thanks.
Posted on 6/4/13 at 9:12 pm to Spirit of Dunson
quote:
Even if my effective tax rate is going up?
Yes. Even though you don't receive the deduction you still don't get taxed on the growth via a capital gains tax. It still acts as a tax shelter.
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