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Tax question.....regarding traditional IRA
Posted on 2/3/13 at 7:43 pm
Posted on 2/3/13 at 7:43 pm
So I was doing my taxes on turbo tax and the turbo tax thing claims that I can't deduct my IRA contributions since my income is too high and/or I have an employer sponsored plan (401k)
2 things:
1. the 401K is from an old company and I no longer have it
2. I can't fathom that my income is really that high where I wouldn't be eligible for the tax benefits of a traditional IRA
I suppose if it really is then there is no point at all in me having one and I need to convert it to a ROTH right?
2 things:
1. the 401K is from an old company and I no longer have it
2. I can't fathom that my income is really that high where I wouldn't be eligible for the tax benefits of a traditional IRA
I suppose if it really is then there is no point at all in me having one and I need to convert it to a ROTH right?
2
Posted on 2/3/13 at 8:00 pm to Powerman
Well what's your income level?
Posted on 2/3/13 at 10:08 pm to ATL TGR
Single and in the 120 to 140k range depending on overtime
Posted on 2/4/13 at 7:39 am to Dead Mike
quote:
Here are the deduction limits for 2012 if you're covered by an employer-sponsored plan:
Thanks
But I'm not currently covered by an employee sponsored plan
I just had some 401K contributions from my old job (part of 2012)
Do you know if that matters or am I considered covered since I had some contributions from 2012?
Posted on 2/4/13 at 8:35 am to Powerman
I think you are considered part of that plan for the 2012 year. If you've already made the traditional contribution you are probably going to have to recharaterize that to a Roth.
Posted on 2/4/13 at 8:41 am to Broke
Thanks
It looks like either way switching to a ROTH is going to be my best bet because I'll be contributing to current company 401K in July after I'm eligible (1 year mark)
Next question: the traditional ROTH I have is a rollover account that has my old 401K in it. If I switch to a ROTH is that going to have tax consequences on that rollover amount?
It looks like either way switching to a ROTH is going to be my best bet because I'll be contributing to current company 401K in July after I'm eligible (1 year mark)
Next question: the traditional ROTH I have is a rollover account that has my old 401K in it. If I switch to a ROTH is that going to have tax consequences on that rollover amount?
Posted on 2/4/13 at 8:44 am to Powerman
quote:
the traditional ROTH
There is no such thing as a traditional Roth. It's either traditional or Roth. If it's old 401k money then it's a traditional IRA. Unless it was a Roth 401k that the money came from (highly doubt it). If you switch that to a Roth you will have tax consequences on the entire amount. Again, unless it was a Roth 401K.
Posted on 2/4/13 at 9:04 am to Broke
I meant traditional IRA
I need some coffee
The rollover IRA was a traditional IRA that had the old 401K money in it
That's the one I'm contemplating converting to a ROTH IRA (there really isn't that much in the account so I can live with the tax consequences of the 401K portion)
I need some coffee
The rollover IRA was a traditional IRA that had the old 401K money in it
That's the one I'm contemplating converting to a ROTH IRA (there really isn't that much in the account so I can live with the tax consequences of the 401K portion)
Posted on 2/4/13 at 9:06 am to Powerman
quote:
That's the one I'm contemplating converting to a ROTH IRA (there really isn't that much in the account so I can live with the tax consequences of the 401K portion)
I think we have our answer then. I would double check with a tax pro on this though. I'm not 100% sure of the ramifications of partially funding a 401k and trying to do a traditional IRA
Posted on 2/4/13 at 9:44 am to Powerman
quote:
That's the one I'm contemplating converting to a ROTH IRA (there really isn't that much in the account so I can live with the tax consequences of the 401K portion)
I don't think there's a penalty if you don't touch the money and follow all the appropriate rollover rules - however, going from a traditional to a Roth, you will be responsible for the raw income tax (I'm not sure about the payroll tax portion - consult your tax professional) because you're going from pre-tax to post-tax contributions.
Posted on 2/4/13 at 10:03 am to Ace Midnight
quote:
consult your tax professional
The money talk forum is my tax pro
Posted on 2/4/13 at 10:05 am to Ace Midnight
You could always just keep the previously funded traditional IRA and recharacterize your contributions for 2012.
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