IRA/Roth IRA rules

MAGI for Roth and non-deductable IRA to Roth Conversions.

where does deductable IRAs end? like 60k?

Roth is like 105-120 but it steps down over that period.

And it seems like it would be stupid to keep a non-deductable IRA in place rather than converting it/recharacterizing it to a Roth since the [edit: Upfront] tax diff is negligable
 
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since this came up. I have a question about a Roth IRA.

I started one a few years ago, and contribute to it with no problems. Last October, I got married and my wife and I make over the joint contribution limit. Does anyone know how this works. If I keep feeding my roth IRA money and the IRS looks into it, do they just give me my money back that was contributed? what about cap gain/loss?

Thanks.
 
Jg said:
since this came up. I have a question about a Roth IRA.

I started one a few years ago, and contribute to it with no problems. Last October, I got married and my wife and I make over the joint contribution limit. Does anyone know how this works. If I keep feeding my roth IRA money and the IRS looks into it, do they just give me my money back that was contributed? what about cap gain/loss?

Thanks.
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I over contributed last year because I went over the salary thing and wasnt paying attention.

Basically you have to fill out some forms, and pull out the money that you went over. Sounds easy so far...

But then you have to pull back what the money you pulled out made, so they can tax it + pay any fees / penalties. I don't think I paid any penalties because I caught it "in a timely manner"

This was hard for me because I redid all my investments in my rothira when I contributed last year.

So ultimately I calculated the best I could and filled out all the forms.


Turbotax catches this if you enter in your rothira info (glad i did even though its not necessary).

Turbotax points you in the right direction but finding the forms and exactly what to do was not super easy (how much to pull out)

Good luck.
 
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Jg said:
since this came up. I have a question about a Roth IRA.

I started one a few years ago, and contribute to it with no problems. Last October, I got married and my wife and I make over the joint contribution limit. Does anyone know how this works. If I keep feeding my roth IRA money and the IRS looks into it, do they just give me my money back that was contributed? what about cap gain/loss?

Thanks.
Click to expand...

Excess Roth IRA Contributions

Planning is essential, however, because contributing too much to your Roth IRA may subject you to a 6% excise tax if you don’t take care of the situation in a timely manner.
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After re-reading your post, doesnt sound like you over contributed, but are just asking whether to keep contributing?

Umm sure, you could also go ahead and not file taxes for the year too


but to answer your question, yes they will make you pull it out, and the earnings, then tax the earnings + pay any fees/etc

not worth it
 
Jg said:
since this came up. I have a question about a Roth IRA.

I started one a few years ago, and contribute to it with no problems. Last October, I got married and my wife and I make over the joint contribution limit. Does anyone know how this works. If I keep feeding my roth IRA money and the IRS looks into it, do they just give me my money back that was contributed? what about cap gain/loss?

Thanks.
Click to expand...

here's the penalties:

Excess Contributions to Roth IRAs


here's how you 'back door Roth' if you MAGI is too high:
The Backdoor Roth IRA: A Complete How-To - The Finance Buff

but if you already have a IRA/SEP/SIMPLE its difficult.

I'm also not sure you can do the 10k to one Roth, i think its 5 to yours and 5 to hers (I don't think there are joint roth IRAs, but i'm searching)
 
Skibbi9 said:
MAGI for Roth and non-deductable IRA to Roth Conversions.

where does deductable IRAs end? like 60k?

Roth is like 105-120 but it steps down over that period.

And it seems like it would be stupid to keep a non-deductable IRA in place rather than converting it/recharacterizing it to a Roth since the [edit: Upfront] tax diff is negligable
Click to expand...
the MAGI for a single is 60k this year I think for the IRA deduction; I haven't been able to do this for ages -- plus your company likely offers a 401k and unfortunately you will have to use that. Unless you are lucky, this means you have to use a small basket of crappy mutual funds. For mine, I allocate a lot of it into real estate, index, and bond funds. Of course I would much rather invest in individual stocks so I didn't have my return degraded by the fund fees, but I have no such option. I still max out my Roth and count on that to make my retirement. If somehow I come up with enough deductions that I can get my MAGI low enough to take advantage of any IRA deduction, I guess I'll throw some in there but after looking over my brokerage documents today that seems completely unlikely. I can't even take the student loan interest deduction anymore.

At this level, you could always consider looking for other tax shelters like muni bonds (do they even pay out much anymore?) but personally I've purchased some direct interest into domestic oil fields as they are tax advantaged, even though that kind of commodity exposure isn't really my cup of tea. It's tough. There's a lot of places they want to fuck us. Until you get rich enough to really take advantage of the loopholes that the rich can exploit you are going to lose some money.

edit: that backdoor roth ira article is pretty educational.
 
Rayn said:
the MAGI for a single is 60k this year I think for the IRA deduction; I haven't been able to do this for ages -- plus your company likely offers a 401k and unfortunately you will have to use that. Unless you are lucky, this means you have to use a small basket of crappy mutual funds. For mine, I allocate a lot of it into real estate, index, and bond funds. Of course I would much rather invest in individual stocks so I didn't have my return degraded by the fund fees, but I have no such option. I still max out my Roth and count on that to make my retirement. If somehow I come up with enough deductions that I can get my MAGI low enough to take advantage of any IRA deduction, I guess I'll throw some in there but after looking over my brokerage documents today that seems completely unlikely. I can't even take the student loan interest deduction anymore.

At this level, you could always consider looking for other tax shelters like muni bonds (do they even pay out much anymore?) but personally I've purchased some direct interest into domestic oil fields as they are tax advantaged, even though that kind of commodity exposure isn't really my cup of tea. It's tough. There's a lot of places they want to fuck us. Until you get rich enough to really take advantage of the loopholes that the rich can exploit you are going to lose some money.

edit: that backdoor roth ira article is pretty educational.
Click to expand...
Yeah, I haven't been able to deductable IRA in a while, and I know i wont be able to Roth next year (options vesting from 2009 ESPP), this year i'm not entirely sure yet as I don't have all my tax paperwork yet.

the 2013+ tax rates make me a sad panda

work has a decent 401k plan, not perfect and I'm drafting something to ask to get a few more options but we have PTTRX for bonds, VINIX, and a few other sub 0.50% ER things to choose from. That and we have Roth 401k option, so I can shelter money in through there and whenever I switch jobs i can roll that roth401k into the rothIRA
 
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Thanks for the help. And also for the link. It seems simple enough. I don't have a traditional IRA, so I'll look into that work around you posted skibbi
 
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