I hope knowledgeable people can give some advice or thoughts for us. Or if there is need, maybe I'll have to visit fairmark.com and post there.
2013 is the 1st year when our AGI will fall into the phase-out area (http://www.irs.gov/Retirement-Plans/Amo ... e-For-2013
). Right now we continue contributing to our RIRA's, but will need to stop soon just to be safe and not over-contribute or the IRS will slap us http://www.irs.gov/publications/p590/ch ... 1000230988
. Future years will depend on a bonus. If yes, we'll have the same 'problem'
So, my questions are how to plan further because I've read various opinions all over the place on the Internet.
1. Should we open non-deductible TIRA's? Some blogger said it's not worth it and just do taxable investments, though I deem there would be more pros for a TIRA, wouldn't there?
2. Is opening a non-deductible TIRA only a call away to Vanguard or maybe even online?
3. I'm guessing that we should wait until 2014 to figure out the exact MAGI and then invest in the RIRA to its allowed reduced limit for us and afterwards open a non-deductibe TIRA for the difference to reach $5,500. Does this sound OK or should I think about some other things as well?
4. AMT never applied to us, not sure about this year. In case it does, which AGI is it used for the Question 3: the one from form 1040 or per AMT calculations?
5. Now the biggest question is what to do with the non-deductible TIRA: convert to RIRA immediately or no use to bother?
Some say it's good to have various buckets for the retirement (taxable, 401k, RIRA and TIRA). Others say it's not worth the hassle because it's more work than benefits are derived from it. We might fall in this category, because it will be max $3k/account for 2013, and I have no clue whatsover how the RIRA conversion is done and how it's reported on taxes (don't even want to think about recharacterization). Still others say that if you still wish to do RIRA conversion, one can wait for a few years or do it just before the retirement, but my problem with this advice is that a converter will end up paying more taxes since the account will be of higher value (hopefully) and if laid-off unexpectedly and his/her 401k is rolled-over to a TIRA the latter comes into play when calculating taxes (correct?).
6. This relates to the question 5. In case I chose to convert a new TIRA to RIRA, shouldn't it be done by Dec.31st instead of April 15, 2014. Just checking if I didn't misread this tidbit.
Any thoughts about the above are appreciated. Thank you.