Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Thank you. Is there a standard method for analyzing which is best, a traditional or a Roth? Or is it pretty much just about guessing whether you are going to be paying higher taxes now or later? For instance, at 58 with a 6-figure income (do not qualify for IRAs) and investments pretty much contained to moderate employer pensions, 401Ks, and personal savings, I'm "guessing" that our taxes will be lower in retirement, hence stick with the traditional?
I'm going to piggy back my own question since its on this same topic... I have not been able to find a concrete answer of how much you can contribute to a Roth if you make slightly over the maximum. IE the maximum you can make is 108k to contribute 5k to your roth. If I make 110 what can I contribute? I'm not sure how much I will pull in this year and I may or may not be over the 108k figure.
But Since the Roth is AfterTax Money, what you can do if you are over the income max for the Roth is to Fund a AfterTax Standard IRA, Then the two days later roll the Standard IRA into a ROTH Rollover account. You are still limited to 5 (or 6) K but its a way of getting money into a ROTH if you are over the income limits.
I'm not a CPA...but here's what I think to be true:
- Earnings on Roth IRA are not taxable
- You can withdraw any amount that is deposited without penalty at any time for any reason. No earnings can be withdrawn before a certain age (59.5 I think)
- If you have a 401K with a match from your employer, it's probably best to start there since it's a 50% return right away.
- Whether it's better to put extra money into a Roth vs. IRA/401K is dependend on today's tax rate/bracket and your future tax rate/bracket. Something we can all guess at but not really ever know for sure. If you are saving well and will have a lot of income in retirement, and don't have mortage interest to deduct anymore, you might be in a higher bracket later. Especially if tax rates rise which is to be expected considering the state of the budget and deficit.
long101, here is the IRS website on Roth IRA. Scroll down to the blue link on Contribution Limit Reduced and there is a algorithm for you to follow. It's never easy with IRS pubs, they have a long complex method when a simple formula would work. But the info is there.
long101, here is the IRS website on Roth IRA. Scroll down to the blue link on Contribution Limit Reduced and there is a algorithm for you to follow. It's never easy with IRS pubs, they have a long complex method when a simple formula would work. But the info is there.
Thanks for that, but it doesnt really help me for the current year. I'm not sure how much I will make this year. I guess the only way to contribute is to wait for the end of this year and see where I end. Do you know if they factor pre tax deductions into your MAGI (401k, insurance, ect)? If they do then I will be well under the 108k mark.
I think so but better question for a tax preparer. And I think (check!) that you can contribute through March for prior year.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
