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Old 02-06-2015, 04:02 PM
 
18,637 posts, read 13,431,397 times
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Quote:
Originally Posted by flyingsaucermom View Post
That's my point to lowerexpectations! 401k is already deducted, but he says it's not.


What are you talking about?
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Old 02-06-2015, 04:06 PM
 
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So your husband's income is about 202.5 before deducting his 401k contribution and about 185k after, correct?

Just contribute 11k to traditional IRAs. The day after your deposit posts, call your custodian and say you want to convert them to Roths. There you go, Bob's your uncle.
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Old 02-06-2015, 04:06 PM
 
Location: Portal to the Pacific
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Quote:
Originally Posted by Lowexpectations View Post
I gave no idea what line 37 is. 165k would roughly be what reported between my wife and Is w2s as federally taxable wages


I just looked at a 1040 and line 7 would be 165k
Okay, well that makes a difference... ours is $177k...

"no idea what line 37 is"..

according to form 1040 (and it's in bold print) line 37 is the adjusted gross income.

Now I feel like we're getting somewhere.
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Old 02-06-2015, 04:09 PM
 
Location: Portal to the Pacific
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Quote:
Originally Posted by Petunia 100 View Post
So your husband's income is about 202.5 before deducting his 401k contribution and about 185k after, correct?

Just contribute 11k to traditional IRAs. The day after your deposit posts, call your custodian and say you want to convert them to Roths. There you go, Bob's your uncle.
I'm not sure what his 401k contribution was in 2013 (everything I'm talking about is based on last year's tax return). But on the W-2 line 5 (which is the biggest number) is $190k.. line 1 is $176k

Yes, Bob can be my uncle.. I'm tired of trying to figure this out...

I will do a back door Roth through vanguard.
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Old 02-06-2015, 04:11 PM
 
18,637 posts, read 13,431,397 times
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Quote:
Originally Posted by flyingsaucermom View Post
Okay, well that makes a difference... ours is $177k...

"no idea what line 37 is"..

according to form 1040 (and it's in bold print) line 37 is the adjusted gross income.

Now I feel like we're getting somewhere.


If line 7 is 177k what is getting added it to bring line 37 above 182?
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Old 02-06-2015, 04:18 PM
 
Location: Portal to the Pacific
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Quote:
Originally Posted by Lowexpectations View Post
If line 7 is 177k what is getting added it to bring line 37 above 182?
some taxable interest, dividends and captial gains.... but $4k comes from consulting gigs.
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Old 02-06-2015, 11:00 PM
 
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You're getting hung up in the semantics of the whole thing. A 401(k) reduces your AGI, just not at the point you were assuming it does.

It does NOT do it by reducing [your 1040] line 22 (total income) going to line 37 (AGI). There is no line item for 401(k) in that section.

Instead, it does it before it ever even hits your 1040 - it's already been accounted for when you fill in line 7 (Wages, salaries, tips).

What becomes confusing is that we throw the phrase "gross income" around loosely and it ends up getting used for 2 different #'s :
- your "Box 5" on the W-2 (total earnings with your company)
- your "Box 1" on the W-2 which is what gets put onto the 1040 line 7. (Box 1 is Box 5 reduced by your 401k contribution amount)

[You could also argue people use it a 3rd way to refer to the "total income" of line 22]
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Old 02-06-2015, 11:13 PM
 
Location: Portal to the Pacific
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Quote:
Originally Posted by snowdenscold View Post
You're getting hung up in the semantics of the whole thing. A 401(k) reduces your AGI, just not at the point you were assuming it does.

It does NOT do it by reducing [your 1040] line 22 (total income) going to line 37 (AGI). There is no line item for 401(k) in that section.

Instead, it does it before it ever even hits your 1040 - it's already been accounted for when you fill in line 7 (Wages, salaries, tips).

What becomes confusing is that we throw the phrase "gross income" around loosely and it ends up getting used for 2 different #'s :
- your "Box 5" on the W-2 (total earnings with your company)
- your "Box 1" on the W-2 which is what gets put onto the 1040 line 7. (Box 1 is Box 5 reduced by your 401k contribution amount)
It finally became understandable once I busted out with the 1040 and compared it to someone else's (I almost always have to have some sort of tangible experience to learn).

Two things I learned today:

1) Our total "gross income" (or all our combined income + 401k + matching contributions) is $200k+.
2) I will need to backdoor the roth IRA.

I had some moments where I struggled, but I'm feeling better now. I am planning on opening the non-deductible IRA with Vanguard and quickly convert it to a roth.

I assume now I need to learn about what to put inside the non-deductible IRA. I know I need to minimize capital gains and dividends.
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Old 02-07-2015, 01:43 AM
 
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alls well that ends well. vanguard is great. i use them for most of my investments.

as for what to invest in, that's an asset allocation question and depends on your age, years to retirement, etc.

vanguard total stock market or vanguard total bond market are a good place to start. at your age, i would guess a 50/50 mix is not a bad place to start.

RVD.
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Old 02-07-2015, 07:45 AM
 
Location: Omaha, Nebraska
7,089 posts, read 4,050,024 times
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Quote:
Originally Posted by flyingsaucermom View Post
I assume now I need to learn about what to put inside the non-deductible IRA. I know I need to minimize capital gains and dividends.
For the tIRA, put it in a money market account. The value will stay dead flat for the few days the money is sitting in there before you roll it over.

For the Roth, I'm putting my funds in Vanguard's REIT, since that's not something I'd want to hold in a taxable account. But YMMV. Bond funds work well in Rothschild as well, for the same reasons.
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