Confusion about Roth IRA income contribution limit
Confusion about Roth IRA income contribution limit
Hello,
For Roth IRA contribution income limit, I believe I need to see tax line item 37 in 1040 form which should not go beyond 193K for Married-Filling Jointly. I always do Standard deduction. This year I changed jobs and have got RSU's and might be getting some bonus (getting both for the first time). Now, I would like to check back with you guys whether RSU income and Bonus..does it gets included in my W2 form.
The reason I ask is because of this, I might be over Roth IRA Contribution limit income
For now, I am just counting below to estimate my income for Roth IRA contribution limit (I am also not deducting Standard deduction-husband and wife and Exemption per family member as these 2 comes after line 37)
W2 (should include my wages, RSU's and Bonus amount??)
Taxable Interest
Ordinary Dividend
Qualified Dividend
Capital Gain
Can anybody please help confirm?
-Thanks,
FB
For Roth IRA contribution income limit, I believe I need to see tax line item 37 in 1040 form which should not go beyond 193K for Married-Filling Jointly. I always do Standard deduction. This year I changed jobs and have got RSU's and might be getting some bonus (getting both for the first time). Now, I would like to check back with you guys whether RSU income and Bonus..does it gets included in my W2 form.
The reason I ask is because of this, I might be over Roth IRA Contribution limit income
For now, I am just counting below to estimate my income for Roth IRA contribution limit (I am also not deducting Standard deduction-husband and wife and Exemption per family member as these 2 comes after line 37)
W2 (should include my wages, RSU's and Bonus amount??)
Taxable Interest
Ordinary Dividend
Qualified Dividend
Capital Gain
Can anybody please help confirm?
-Thanks,
FB
Thanks, |
FB
-
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Re: Confusion about Roth IRA income contribution limit
I believe bonuses are included in W-2. I'm not familiar with RSU. Contributions to Traditional 401k will reduce the amount on box 1 of the W-2 which flows into box 7 of 1040 and is included in AGI. Roth 401k contributions do not reduce your W-2 box 1.
Modified Adjusted Gross Income for Roth IRA purposes starts with AGI and makes modifications. Here's a link to an IRS page showing worksheet 2-1 to calculate MAGI for Roth IRA purposes:
http://www.irs.gov/publications/p590a/c ... 1000230985
Modified Adjusted Gross Income for Roth IRA purposes starts with AGI and makes modifications. Here's a link to an IRS page showing worksheet 2-1 to calculate MAGI for Roth IRA purposes:
http://www.irs.gov/publications/p590a/c ... 1000230985
Re: Confusion about Roth IRA income contribution limit
FB,
You may be able to do backdoor Roth contributions instead. See:
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
However, if you already have deductible contributions in any traditional IRA, you may have second thoughts. If you have questions, just ask. There are also many threads here that talk about backdoor Roth contributions.
You may be able to do backdoor Roth contributions instead. See:
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
However, if you already have deductible contributions in any traditional IRA, you may have second thoughts. If you have questions, just ask. There are also many threads here that talk about backdoor Roth contributions.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: Confusion about Roth IRA income contribution limit
Hi Celia,celia wrote:FB,
You may be able to do backdoor Roth contributions instead. See:
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
However, if you already have deductible contributions in any traditional IRA, you may have second thoughts. If you have questions, just ask. There are also many threads here that talk about backdoor Roth contributions.
Yes..I am planning to do backdoor Roth IRA but first I want to make sure how the contribution limit for Roth IRA works.
DSInvester confirmed...bonus comes in W2 but are you aware whether RSU's are also included in W2..would appreciate if you can reply to my initial question.
Thanks, |
FB
Re: Confusion about Roth IRA income contribution limit
Why don't you start a new thread with "Restricted Stock Unit (RSU)" in the title with a question specific to that investment. Many of us don't know anything about them (including me) but a new thread specifically for that topic will hopefully catch the attention of those who are familiar with them.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: Confusion about Roth IRA income contribution limit
Did you notice that DSInvestor mentioned the term Modified AGI?FB01 wrote:For Roth IRA contribution income limit, I believe I need to see tax line item 37 in 1040 form which should not go beyond 193K for Married-Filling Jointly.
Line 37 is your AGI but what you need to calculate is the Modified AGI as defined for Roth IRA. It may not be the same as your AGI.
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- TomatoTomahto
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Re: Confusion about Roth IRA income contribution limit
RSUs are included in W2s in the tax year that they vest, not the year in which they are granted. Their value is also determined on the vesting day, not the grant day....but are you aware whether RSU's are also included in W2...
I get the FI part but not the RE part of FIRE.
Re: Confusion about Roth IRA income contribution limit
Retiredjg,retiredjg wrote:Did you notice that DSInvestor mentioned the term Modified AGI?FB01 wrote:For Roth IRA contribution income limit, I believe I need to see tax line item 37 in 1040 form which should not go beyond 193K for Married-Filling Jointly.
Line 37 is your AGI but what you need to calculate is the Modified AGI as defined for Roth IRA. It may not be the same as your AGI.
I went through the link and just to make sure as I do not have those deduction mentioned in the link. To make it simple, can anyone please confirm if the Roth IRA Contribution Income limit has the below. It does not consider the Standard deduction and Exemptions per family member
W2 (Includes Bonus and RSU's that vest in the current year)
Taxable Interest
Dividends - Ordinary/Qualified
Capital Gain
If the Total of above goes beyond 191K for Married (Filing jointly), I cannot to Roth IRA contribution. After this MAGI, all the deductions will occur which are not considered for the Roth IRA contribution limit.
I would appreciate if anyone can confirm.
-FB
Thanks, |
FB
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Re: Confusion about Roth IRA income contribution limit
We can not confirm, because we do not know all the elements of your 1040.
As has been described; Your Roth MAGI is line 37 adjusted by the ROTH MAGI worksheet.
If you complete both of these, you will have your answer.
As has been described; Your Roth MAGI is line 37 adjusted by the ROTH MAGI worksheet.
If you complete both of these, you will have your answer.
-
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Re: Confusion about Roth IRA income contribution limit
The entire first page of the 1040 tax form is to get to your AGI. We do not know what your tax situation is.FB01 wrote:Retiredjg,retiredjg wrote:Did you notice that DSInvestor mentioned the term Modified AGI?FB01 wrote:For Roth IRA contribution income limit, I believe I need to see tax line item 37 in 1040 form which should not go beyond 193K for Married-Filling Jointly.
Line 37 is your AGI but what you need to calculate is the Modified AGI as defined for Roth IRA. It may not be the same as your AGI.
I went through the link and just to make sure as I do not have those deduction mentioned in the link. To make it simple, can anyone please confirm if the Roth IRA Contribution Income limit has the below. It does not consider the Standard deduction and Exemptions per family member
W2 (Includes Bonus and RSU's that vest in the current year)
Taxable Interest
Dividends - Ordinary/Qualified
Capital Gain
If the Total of above goes beyond 191K for Married (Filing jointly), I cannot to Roth IRA contribution. After this MAGI, all the deductions will occur which are not considered for the Roth IRA contribution limit.
I would appreciate if anyone can confirm.
-FB
1. Pls try to calculate your AGI and then make adjustments to get your MAGI for Roth IRA purposes.
2. Your number of 191K for MAGI for Roth IRA purposes is wrong. Here's a link to an IRS page showing limits for 2015 tax year:
http://www.irs.gov/Retirement-Plans/Amo ... e-For-2015
If you and your spouse are looking to max out Roth IRA contributions, MAGI for Roth IRA purposes must be under 183K. Reduced contributions are permitted if MAGI is between 183K and 193K. No Roth IRA contributions permitted if MAGI exceeds 193K.
Are you and your wife contributing to 401k, 403b, or 457b? Traditional contributions to 401k, 403b,457b will help reduce your AGI which in turn helps reduce your MAGI for Roth IRA purposes. If you are making Roth 401k contributions and have not maxed out for 18K, you have time to switch to Traditional 401k contributions.
Re: Confusion about Roth IRA income contribution limit
-FB[/quote]
The entire first page of the 1040 tax form is to get to your AGI. We do not know what your tax situation is.
1. Pls try to calculate your AGI and then make adjustments to get your MAGI for Roth IRA purposes.
2. Your number of 191K for MAGI for Roth IRA purposes is wrong. Here's a link to an IRS page showing limits for 2015 tax year:
http://www.irs.gov/Retirement-Plans/Amo ... e-For-2015
If you and your spouse are looking to max out Roth IRA contributions, MAGI for Roth IRA purposes must be under 183K. Reduced contributions are permitted if MAGI is between 183K and 193K. No Roth IRA contributions permitted if MAGI exceeds 193K.
Are you and your wife contributing to 401k, 403b, or 457b? Traditional contributions to 401k, 403b,457b will help reduce your AGI which in turn helps reduce your MAGI for Roth IRA purposes. If you are making Roth 401k contributions and have not maxed out for 18K, you have time to switch to Traditional 401k contributions.[/quote]
DSInvestor...
Ahhh...my wife does not work but I contribute to 401K fully..that helps...so out of my MAGI, I will need to deduct 18K.
You mentioned "The entire first page of the 1040 tax form is to get to your AGI.". That helps, as I was not sure if Page 2 (Tax and Credits) come into picture. My Tax situation is pretty simply..Standard deduction...W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K...
The entire first page of the 1040 tax form is to get to your AGI. We do not know what your tax situation is.
1. Pls try to calculate your AGI and then make adjustments to get your MAGI for Roth IRA purposes.
2. Your number of 191K for MAGI for Roth IRA purposes is wrong. Here's a link to an IRS page showing limits for 2015 tax year:
http://www.irs.gov/Retirement-Plans/Amo ... e-For-2015
If you and your spouse are looking to max out Roth IRA contributions, MAGI for Roth IRA purposes must be under 183K. Reduced contributions are permitted if MAGI is between 183K and 193K. No Roth IRA contributions permitted if MAGI exceeds 193K.
Are you and your wife contributing to 401k, 403b, or 457b? Traditional contributions to 401k, 403b,457b will help reduce your AGI which in turn helps reduce your MAGI for Roth IRA purposes. If you are making Roth 401k contributions and have not maxed out for 18K, you have time to switch to Traditional 401k contributions.[/quote]
DSInvestor...
Ahhh...my wife does not work but I contribute to 401K fully..that helps...so out of my MAGI, I will need to deduct 18K.
You mentioned "The entire first page of the 1040 tax form is to get to your AGI.". That helps, as I was not sure if Page 2 (Tax and Credits) come into picture. My Tax situation is pretty simply..Standard deduction...W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K...
Thanks, |
FB
Re: Confusion about Roth IRA income contribution limit
401k contributions already reduce your income reported on the W-2.
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Re: Confusion about Roth IRA income contribution limit
If you're using your Salary+bonus as a starting point as an estimate for your W-2 Salary, you should subtract 18K of Traditional 401k contributions as you calculate your AGI. If you're taking your W-2 box 1 number as the starting point you don't want to subract it because that already has your Trad401k contributions taken into account. If you contribute to Traditional 401k, you will notice that your W2 box 1 has a smaller number than your box 3 (social security wages) and box 5 (medicare wages). W-2 box 1 is the number that flows into 1040 form line 7.FB01 wrote: DSInvestor...
Ahhh...my wife does not work but I contribute to 401K fully..that helps...so out of my MAGI, I will need to deduct 18K.
You mentioned "The entire first page of the 1040 tax form is to get to your AGI.". That helps, as I was not sure if Page 2 (Tax and Credits) come into picture. My Tax situation is pretty simply..Standard deduction...W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K...
Page 2 of the 1040 tax form is not considered for MAGI for Roth IRA purposes. Page 1 calculates AGI. Page 2 starts with AGI and calculates Taxable Income and Tax liability. Once you have your AGI (bottom of page 1), make modifications to get your MAGI for Roth IRA purposes.
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Re: Confusion about Roth IRA income contribution limit
OP is probably not be working off a W-2 this early in the year. If estimating AGI using his gross salary, he should subtract Traditional 401k contributions. If working off W-2 box 1, then there is no need to do so as that number is already adjusted for Trad 401k contributions.nolesrule wrote:401k contributions already reduce your income reported on the W-2.
Re: Confusion about Roth IRA income contribution limit
I think you still may not be understanding.
Your AGI and modified AGI are calculated before you get to the place in your return where you take out deductions and exemptions. Page 2 does not come into the picture at all.
No, you don't get to subtract the 401k contribution because it was not included in the W2 entry on line 7 Form 1040 in the first place.W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K
Your AGI and modified AGI are calculated before you get to the place in your return where you take out deductions and exemptions. Page 2 does not come into the picture at all.
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Re: Confusion about Roth IRA income contribution limit
Right. For estimating.DSInvestor wrote:OP is probably not be working off a W-2 this early in the year. If estimating AGI using his gross salary, he should subtract Traditional 401k contributions. If working off W-2 box 1, then there is no need to do so as that number is already adjusted for Trad 401k contributions.nolesrule wrote:401k contributions already reduce your income reported on the W-2.
But the OP wrote...
I was just trying to make it clear that doing that math would "double count" 401k contributions.W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K
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Re: Confusion about Roth IRA income contribution limit
My apologies. You're absolutely correct.nolesrule wrote: But the OP wrote...
I was just trying to make it clear that doing that math would "double count" 401k contributions.W2 + Taxable Interest +Dividends + Gains - 401K contribution = should not be greater than 183K
Re: Confusion about Roth IRA income contribution limit
How about "double uncount"….nolesrule wrote:I was just trying to make it clear that doing that math would "double count" 401k contributions.
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Re: Confusion about Roth IRA income contribution limit
retiredjg wrote:How about "double uncount"….nolesrule wrote:I was just trying to make it clear that doing that math would "double count" 401k contributions.