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Traditional IRA limits?

Posted on 9/15/23 at 8:15 am
Posted by CHiPs25
Member since Apr 2014
3068 posts
Posted on 9/15/23 at 8:15 am
Is there a contribution or salary limit to Traditional IRA? I cashed out some money from my stocks and have about $20k that I would like to put into VTSAX but a google search showed that the limit is $6,500. I believe this limit is for a ROTH IRA and not just a traditional IRA. In my vanguard account, the VTSAX is currently listed under Traditional IRA which is why i'm asking about contribution limits.
Posted by Fat Bastard
2024 NFL pick'em champion
Member since Mar 2009
89303 posts
Posted on 9/15/23 at 8:24 am to
contribution limit? YES

salary limit? NO..... however the amount you can deduct on taxes phases out the higher your income.

also depends on your 401k deductions.

quote:

But there’s a big caveat: If you have a 401(k) or other retirement plan at work, or your spouse does, then your contribution to a traditional IRA may not be deductible.


LINK
This post was edited on 9/15/23 at 8:33 am
Posted by CHiPs25
Member since Apr 2014
3068 posts
Posted on 9/15/23 at 8:30 am to
What would be the game plan for the remaining money then? Are there other investments like VTSAX that I could put the rest of the money in?
Posted by Teddy Ruxpin
Member since Oct 2006
40598 posts
Posted on 9/15/23 at 8:59 am to
The traditional and ROTH IRA limits are the same.
Posted by TorchtheFlyingTiger
1st coast
Member since Jan 2008
2920 posts
Posted on 9/15/23 at 9:21 am to
quote:

In my vanguard account, the VTSAX is currently listed under Traditional IRA 
What do you mean by this? VTSAX can be purchased in a taxable brokerage, Roth IRA or Traditional IRA.

What type account did you sell the stock in? I ask because when you say VTSAX is listed under traditional IRA it makes me wonder if you sold stock from IRA and just need to reinvest which wouldn't be a contribution (unless you withdrew the cash proceeds from the account already.)

Do you already have a traditional IRA or Roth IRA? Even if you're over income limit you can do backdoor Roth (unless you have traditional IRA which would trigger pro rata rule.)
This post was edited on 9/15/23 at 10:19 am
Posted by Jag_Warrior
Virginia
Member since May 2015
4292 posts
Posted on 9/15/23 at 2:46 pm to
quote:

What type account did you sell the stock in? I ask because when you say VTSAX is listed under traditional IRA it makes me wonder if you sold stock from IRA and just need to reinvest which wouldn't be a contribution


Because of the way he worded it in the OP, that’s the same question I had.
Posted by CHiPs25
Member since Apr 2014
3068 posts
Posted on 9/18/23 at 1:09 pm to
quote:

What type account did you sell the stock in?


The money was in my stock account at E-Trade. I withdrew that money into my bank account and now want to put it into my Vanguard account.

quote:

Do you already have a traditional IRA or Roth IRA?


I currently have both in my vanguard. I have not contributed to either in many years (they were both rollover) as my income is too high (i have not done back door, fyi).

Posted by TorchtheFlyingTiger
1st coast
Member since Jan 2008
2920 posts
Posted on 9/19/23 at 8:26 am to
Yes, the $6500 contribution limit also applies to traditional IRA. There is also an income limit so may not get full or any tax deduction. (But you already knew this since you said you haven't contributed because income is too high.) Only benefit I can see over taxable is the tax differed growth and perhaps creditor protections on retirement accounts.

I still don't understand what you meant by
quote:

VTSAX is currently listed under Traditional IRA
Do you already hold some VTSAX in that account? You can buy VTSAX in any Vanguard brokerage, taxable or IRA.

If your 401k allows it, you could rollover the traditional IRA into 401k and free up the backdoor Roth method without dealing w pro rata rule.

Why not just buy VTSAX in your taxable brokerage at etrade?
Posted by CHiPs25
Member since Apr 2014
3068 posts
Posted on 9/19/23 at 9:26 am to
quote:

still don't understand what you meant by
quote:
VTSAX is currently listed under Traditional IRA


Basically I rolled over some funds from previous employer into Vanguard, and when I did that it went into the Traditional IRA. I didn't specifically do anything with intent, it's just how it panned out. This was also 8 years' ago so a little foggy on what exactly transpired.

quote:

Why not just buy VTSAX in your taxable brokerage at etrade?


I wasn't aware this was a thing. I'm not a heavy investor, I just max out my 401k and have some funds in my IRA at Vanguard.

Posted by TorchtheFlyingTiger
1st coast
Member since Jan 2008
2920 posts
Posted on 9/19/23 at 9:38 am to
You'd probably have to buy VTI (the ETF equivalent of VTSAX) or use Vanguard taxable brokerage.
Posted by TorchtheFlyingTiger
1st coast
Member since Jan 2008
2920 posts
Posted on 9/19/23 at 10:11 am to
Good on ya for asking questions and congrats on the good income. I cant comprehend how you know enough to trade individual stocks and you're familiar with backdoor IRA yet you cant sort out contribution limits or how to buy a mutual fund or ETF equivalent on your own.
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