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Roth IRA Contributions
Posted on 11/12/13 at 9:29 pm
Posted on 11/12/13 at 9:29 pm
I was not allowed to contribute to my Roth IRA last year due to exceeding income limits. Single, no kids. I max out the company 401k and defer enough to hit IRS max on this as well.
Is there a way to convert either my 401k or another IRA to get allowable contribution into my Roth account?
Is there a way to convert either my 401k or another IRA to get allowable contribution into my Roth account?
3
Posted on 11/12/13 at 9:41 pm to MikeD
Back door roth
Posted on 11/12/13 at 9:45 pm to MikeD
Count your blessings, this is a good problem to have.
You'd have to check with your employer to see if the 401 can be rolled over before you leave your job. Most don't allow that. If you have a regular IRA you can recharacterize it as a Roth though. Of course, you have to pay the tax when you do and given your current income (and tax bracket) it might be smarter not to do this.
You'd have to check with your employer to see if the 401 can be rolled over before you leave your job. Most don't allow that. If you have a regular IRA you can recharacterize it as a Roth though. Of course, you have to pay the tax when you do and given your current income (and tax bracket) it might be smarter not to do this.
Posted on 11/12/13 at 9:50 pm to jimbeam
quote:
Back door roth
Maybe could work, but there are caveats. The big one is that if you already have a large regular IRA you can get hit with a large tax bill b/c the existing balance is taxed too.
But if the OP has no (or has a small) regular IRA this could work.
Posted on 11/12/13 at 9:52 pm to foshizzle
Yea I'm assuming he has no other Ira, in which case is just stick with that
Although arent regular iras not deductible if you have a 401k?? Or when can you not deduct it?
Although arent regular iras not deductible if you have a 401k?? Or when can you not deduct it?
Posted on 11/12/13 at 10:00 pm to jimbeam
Yes I am lucky.
I don't have another IRA. Had a Roth for last few years until last year when I cracked limit. Previously I was hitting max in my Roth each year. Would it be better to not max my 401k, contribute 5k to IRA and then convert?
My thinking is, it's better to pay taxes now and get interest earnings from here on out tax free. Or I guess I can see keeping higher amount in tax bearing account and just pay taxes when it comes out.
So like I said, just looking for some advice.
I don't have another IRA. Had a Roth for last few years until last year when I cracked limit. Previously I was hitting max in my Roth each year. Would it be better to not max my 401k, contribute 5k to IRA and then convert?
My thinking is, it's better to pay taxes now and get interest earnings from here on out tax free. Or I guess I can see keeping higher amount in tax bearing account and just pay taxes when it comes out.
So like I said, just looking for some advice.
Posted on 11/12/13 at 10:22 pm to jimbeam
quote:
arent regular iras not deductible if you have a 401k
Absolutely they're deductible. They're not the same kind of account at all, even though the tax treatment of contributions is similar.
Posted on 11/12/13 at 10:28 pm to MikeD
I'd continue to max out the 401k. Have you considered an Annuity? There are no contribution limits and the earnings are tax deferred. They can have high costs though.
This post was edited on 11/12/13 at 10:29 pm
I have a roth anyway so not a big concern to me as of nowPosted on 11/12/13 at 11:24 pm to jimbeam
so when you do a backdoor roth you just let the 5500 compound since you won't be able to add anymore? i see that it's worth doing because of the tax advantages, but that's such a tiny part of your portfolio.
Posted on 11/13/13 at 5:52 am to Dooshay
everyone seems to use roth ira rather than traditional....why is that? just due to pre tax distributions?
Posted on 11/13/13 at 7:40 am to jimbeam
Where is the easiest place to open a "non-deductible" ira and then immediately convert to a Roth IRA? Can you do this online, or do I need to see a financial advisor of some sort?
Posted on 11/13/13 at 7:48 am to HailToTheChiz
quote:
everyone seems to use roth ira rather than traditional....why is that? just due to pre tax distributions?
Most assumptions are that you are meeting your employer match on a 401(K) if you are employed by a company that offers one.
Most follow this pattern:
1. 401(K) up to employer match
2. Max Roth
3. Max 401(K)
Posted on 11/13/13 at 8:57 am to MikeD
quote:
I was not allowed to contribute to my Roth IRA last year due to exceeding income limits
This limit is $173-183k, but it's not AGI, correct?
Isn't a different calculation? MAGI?
Posted on 11/13/13 at 9:11 am to TheDiesel
So then in a situation with no 401k employer match, go traditional ira?
Posted on 11/13/13 at 9:51 am to Oenophile Brah
I'm pretty sure Roth uses AGI. For someone who is single like the OP the max is $114,000 before phasing out and ending at $129,000.
Posted on 11/13/13 at 9:58 am to TheDiesel
quote:
For someone who is single like the OP the max is $114,000
Correct, sorry I was listing for joint filing.
Are you sure about AGI?
This is what I found. LINK
I believe they add back some of your deductions in calculating your income for roth limitations.
Posted on 11/13/13 at 8:27 pm to TheDiesel
Yeah that's correct. Filing single had me maxed out at 127k.
So reading a little more... it seems to me that I can max out 401k ($15,500 or whatever it is), contribute $5,500 to traditional IRA (not deductible) and the convert the traditional to Roth. Does this sound right?
So reading a little more... it seems to me that I can max out 401k ($15,500 or whatever it is), contribute $5,500 to traditional IRA (not deductible) and the convert the traditional to Roth. Does this sound right?
Posted on 11/13/13 at 10:44 pm to jimbeam
quote:
Thought I had seen somewhere you couldn't deduct Ira if you made a certain amount and had a 401k
Your original statement was not the same:
quote:
arent regular iras not deductible if you have a 401k
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