What to do if expected income MIGHT phase out for Roth IRA

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mx711yam
Posts: 129
Joined: Thu Apr 11, 2013 9:51 am

What to do if expected income MIGHT phase out for Roth IRA

Post by mx711yam » Thu Dec 06, 2018 9:26 pm

I started a company a couple of years ago, and it looks like 2019 might push me out of contributing to my Roth IRA if the growth continues. What do those of you do that don't know whether you should contribute or not do? Leave the money out of the market for the year, backdoor, stick it in taxable until the end of the year?

pdavi21
Posts: 202
Joined: Sat Jan 30, 2016 4:04 pm

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by pdavi21 » Thu Dec 06, 2018 9:28 pm

Just backdoor it, or take the risk and ROTH it with the option to recharacterize as Trad and backdoor it if required.

Same question came up literally yesterday.

Bacchus01
Posts: 2052
Joined: Mon Dec 24, 2012 9:35 pm

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by Bacchus01 » Thu Dec 06, 2018 9:29 pm

pdavi21 wrote:
Thu Dec 06, 2018 9:28 pm
Just backdoor it, or take the risk and ROTH it with the option to recharacterize as Trad and backdoor it if required.

Same question came up literally yesterday.
This.

Backdoor Roth takes about 5 extra minutes.

mx711yam
Posts: 129
Joined: Thu Apr 11, 2013 9:51 am

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by mx711yam » Fri Dec 07, 2018 12:32 am

pdavi21 wrote:
Thu Dec 06, 2018 9:28 pm
Just backdoor it, or take the risk and ROTH it with the option to recharacterize as Trad and backdoor it if required.

Same question came up literally yesterday.
Tried searching and didnt find it.

As far as I know you can no longer recharacterize Roths........

krow36
Posts: 1940
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by krow36 » Fri Dec 07, 2018 1:24 am

You can recharacterize a contribution which is what was suggested. You cannot recharacterize a conversion.
https://www.irs.gov/retirement-plans/ir ... tributions

supalong52
Posts: 123
Joined: Tue Feb 09, 2010 1:51 pm

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by supalong52 » Fri Dec 07, 2018 1:44 am

Why not contribute in 2019, before the 4/15 deadline, when you know how much you've made in 2018?

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GerryL
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Re: What to do if expected income MIGHT phase out for Roth IRA

Post by GerryL » Fri Dec 07, 2018 3:17 am

supalong52 wrote:
Fri Dec 07, 2018 1:44 am
Why not contribute in 2019, before the 4/15 deadline, when you know how much you've made in 2018?
As my income rose, that is what I did. Just wait until after the end of the year and avoid the hassle of having to back out ineligible donation and interest. Having had to do that once (and struggle with trying to get the tax software to let me report that) I opted to wait in future years so I would know how much I could put into a Roth, if anything.

mx711yam
Posts: 129
Joined: Thu Apr 11, 2013 9:51 am

Re: What to do if expected income MIGHT phase out for Roth IRA

Post by mx711yam » Fri Dec 07, 2018 4:25 pm

krow36 wrote:
Fri Dec 07, 2018 1:24 am
You can recharacterize a contribution which is what was suggested. You cannot recharacterize a conversion.
https://www.irs.gov/retirement-plans/ir ... tributions
Perfect that's exactly what I needed to know. Thanks!

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