Bob's not my name wrote:Have you exhausted all means of reducing your AGI -- FSA, maxing traditional 401k's, TLH?
Alan S. wrote:Since you have been making Roth contributions this year, you will have to deal with those if your MAGI indicates an excess Roth contribution.
In future years, if the back door will work for you, in order to avoid the income question just make your initial contributions to the TIRA. Remember that if you convert non deductible contributions to a Roth IRA, there is no 5 year waiting period to withdraw your conversion without penalty because the penalty only applies to the withdrawal of taxable conversion funds, not non taxable funds.
livesoft wrote:Stop contributing to IRAs now. Then after doing your tax return for 2013 in 2014 (even if you don't file it), come back and ask your questions. You do NOT want to deal with overcontribution, excess contribution, excess deferral or whatever they will be calling it. Believe me. Been there. Done that.
You can donate thousands of dollars to charity. The annual limit is something like 30% or 50% of your AGI or more. There is no $250 total limit.
House Blend wrote:If you haven't already, you should read the wiki article on Backdoor Roths.
Key question is whether you or spouse have any existing trad IRAs with pre-tax amounts. If you do not, then the Backdoor Roth should be easy. Note that this applies to you and your spouse separately.
If you do have a trad IRA with pre-tax amounts, then the usual workaround is to roll it over into your employer's 401k/403b. If your employer does not allow this, or it sounds like too much hassle, I would simply wait until early 2014 and see how much you are eligible to directly contribute to a Roth. Skip the Backdoor.
But if you do decide to use a Backdoor Roth, I don't see much point in continuing Roth contributions. Might as well use the Backdoor for all remaining contributions and stop worrying about your MAGI.
Points to remember:
1. There is no such thing as a "non-deductible TIRA". Sometimes contributions can be deducted, sometimes not. But it's still just a TIRA.
2. In the eyes of the IRS, you have only one TIRA. All or your TIRA accounts are combined and treated as one. Likewise, your spouse has only one TIRA.
Regarding your Q5:
You seem to have gotten confused over the difference between having one or more TIRAs with pre-tax contributions and having all of your TIRAS with a balance (almost) equal to their basis in non-deductible contributions. It is the former where you need to be careful about strategizing if and when to convert. For the latter, the tax cost is near 0, so there's no strategy, you just do it.
Regarding your Q6:
IRA contributions have April deadlines, Roth conversions do not have deadlines.
House Blend wrote: But if you do decide to use a Backdoor Roth, I don't see much point in continuing Roth contributions. Might as well use the Backdoor for all remaining contributions and stop worrying about your MAGI.
letsgobobby wrote:Charitable donations don't lower AGI.
House Blend wrote: The question you've directed at me suggests more confusion. The $5500 limit is for the total amount of Roth and TIRA contributions you can designate for 2013. You can spread between the two in any amounts you like (as long as your MAGI says that the Roth part is kosher).
Example: your MAGI leaves you eligible to make a $2000 Roth contribution. So you contribute $2000 to Roth and $3500 to TIRA. Or, you contribute $37 to Roth and $5463 to TIRA. Then you convert the TIRA to Roth at essentially no tax cost.
aida2003 wrote:OTOH, if the turnaround is very fast at Vanguard,
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