Hello,
New job for spouse will put us about halfway into the phaseout range for Roth IRA contributions. Our contributions are auto-set at what I think we will be eligible for. What if I put in too much? Can I withdraw contributions without penalty? Would it be better to wait to contribute until next year for 2017 so I know exactly how much we can contribute based on our income?
AGI in Roth phase out
Re: AGI in Roth phase out
Bondman,Bondman wrote:Hello,
New job for spouse will put us about halfway into the phaseout range for Roth IRA contributions. Our contributions are auto-set at what I think we will be eligible for. What if I put in too much? Can I withdraw contributions without penalty? Would it be better to wait to contribute until next year for 2017 so I know exactly how much we can contribute based on our income?
Could you increase you or your spouse's Trad, 401K contribution to reduce your AGI?
KlangFool
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Re: AGI in Roth phase out
Unfortunately, our expected AGI is right in the middle of the Roth phase out AFTER maximizing both of our $18,000 401(k) deferral.KlangFool wrote:Bondman wrote:Hello,
Could you increase you or your spouse's Trad, 401K contribution to reduce your AGI?
KlangFool
Re: AGI in Roth phase out
It would be better to wait.
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Re: AGI in Roth phase out
If you have no traditional IRA, you should instead consider setting up a backdoor Roth IRA.
Same consideration applies independently to spouse, who might or might not have a traditional IRA.
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
Same consideration applies independently to spouse, who might or might not have a traditional IRA.
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
Re: AGI in Roth phase out
Just wait and make your 2017 Roth contributions in 2018, after you've prepared your tax returns for 2017. You can back the money out without penalty if you over-contribute, but it's just easier to wait.
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Re: AGI in Roth phase out
This is true. If at the end of the year you realize you put too much money into your ROTH IRA, you can ask your broker to take the money out. You will then have to pay income tax on the profits associated with the "excess funds" that you had entered into your ROTH.Rupert wrote:Just wait and make your 2017 Roth contributions in 2018, after you've prepared your tax returns for 2017. You can back the money out without penalty if you over-contribute, but it's just easier to wait.
1) Personally, I would research back-door Roths.
2) If backdoor doesn't work (for reasons such as having a large traditional IRA), then I would wait to enter money in the ROTH until you do taxes for the years.
FWIW - I have this problem this year (getting phased out of Roth). I have been waiting a week already to get my money back from my broker. I was warned that they are very busy and I may have to wait AT LEAST two weeks . . . so I still haven't been able to submit my taxes.
Re: AGI in Roth phase out
If you are willing to use the back door, just go ahead and do it now whether you need it or not. This eliminates the problem of having to wait till you know your exact numbers. It also keeps both steps of the back door on the same Form 8606. Many people like this because it is less confusing because you don't document step one in one tax year and step two in the next tax year.
Suggest you download and pencil through a Form 8606 and see if you can make it work right. If not, don't do the back door until you get the paperwork figured out.
Suggest you download and pencil through a Form 8606 and see if you can make it work right. If not, don't do the back door until you get the paperwork figured out.
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