Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

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elderwise
Posts: 101
Joined: Fri Jul 22, 2016 10:27 am

Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by elderwise » Wed Jan 09, 2019 4:21 pm

MFJ 30 Y.

$100,000 - salary self
$15,000 - salary spouse

2 kids under 12, already do max 18.5K 401K + 18.5 457 Govt.

The agency also deducts 10% of annual pay for mandatory Defined Benefit - Employee Contribution (this does not reduce AGI right?)

After standard deduction 24K, AGI is $39K.Is it a wash to do tIRA (and am i fully eligible to deduct the full 12K spouse + self IRA contribution?) or should i stick to doing Roth IRA?

Also, since I am able to tax defer so much of my gross, would it be slightly better to do a small % to Roth 401K i know its mostly always better todo max trad.

Thanks,

Topic Author
elderwise
Posts: 101
Joined: Fri Jul 22, 2016 10:27 am

Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by elderwise » Wed Jan 09, 2019 4:24 pm

Also forgot to add FSA around 800-1000 annual, Pre Tax and I understand it reduced taxable income as well.

krow36
Posts: 2019
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by krow36 » Wed Jan 09, 2019 6:05 pm

Here's what the IRS says for 2018:
Modified AGI limit for traditional IRA contributions. For 2018, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:
* More than $101,000 but less than $121,000 for a married couple filing a joint return or a qualifying widow(er),
* More than $63,000 but less than $73,000 for a single individual or head of household, or
* Less than $10,000 for a married individual filing a separate return.
 
Modified AGI limit for certain married individuals.
If you are married and your spouse is covered by a retirement plan at work and you aren’t, and you live with your spouse or file a joint return, your deduction is phased out if your modified AGI is more than $189,000 (up from $186,000 for 2017) but less than $199,000 (up from $196,000 for 2017). If your modified AGI is $199,000 or more, you can’t take a deduction for contributions to a traditional IRA.
Modified AGI limit for Roth IRA contributions. For 2018, your Roth IRA contribution limit is reduced (phased out) in the following situations.
* Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $189,000. You can’t make a Roth IRA contribution if your modified AGI is $199,000 or more.
* https://www.irs.gov/publications/p590a# ... 1000230977, (at What's new for 2018)
Does you wife have an employer based retirement plan? If not, she can deduct her traditional IRA. Yours starts phasing out at 101k and isn't allowed with a MAGI of =/<121k, and the same for her if she has an employer retirement plan. Check the link at "What's New for 2019" for the 2019 income limits.

retiredjg
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Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by retiredjg » Wed Jan 09, 2019 7:14 pm

The question is not whether you are eligible for a tIRA - you are. The question is whether you can deduct it. I don't know and I don't think it matters.

If you are filling a 401k and a 457b, you should probably be using Roth IRA even if you could deduct a contribution to tIRA. Tax diversification is a good thing.

02nz
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Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by 02nz » Wed Jan 09, 2019 7:32 pm

+1 on the Roth IRA. And you probably should be making some of your 401/457 contributions as Roth rather than traditional. Only a small amount of your income (if any) falls into the 22% tax bracket. I'd only defer taxes (i.e. with traditional contributions) for that portion. At the next lower rate (12%), I'd rather pay the taxes and lock in with Roth contributions to 401k/457b and IRA.

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grabiner
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Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by grabiner » Wed Jan 09, 2019 8:18 pm

retiredjg wrote:
Wed Jan 09, 2019 7:14 pm
The question is not whether you are eligible for a tIRA - you are. The question is whether you can deduct it. I don't know and I don't think it matters.

If you are filling a 401k and a 457b, you should probably be using Roth IRA even if you could deduct a contribution to tIRA. Tax diversification is a good thing.
In addition, after that 401(k)/457 contribution, you are in the 12% tax bracket. In a 12% tax bracket, a Roth IRA is usually better than a traditional IRA, as you are unlikely to retire at a marginal tax rate lower than 12%. (This is particularly true since you have a defined-benefit plan and a large traditional account.)
Wiki David Grabiner

retiredjg
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Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by retiredjg » Wed Jan 09, 2019 8:46 pm

In fact, maybe you should drill down on the numbers a little and contribute less to the 401k and more to Roth IRA. Getting money into Roth at only 12% is a very good thing.

Topic Author
elderwise
Posts: 101
Joined: Fri Jul 22, 2016 10:27 am

Re: Am I stil eligible for tIRA or only Roth? and is it better to do Roth IRA?

Post by elderwise » Thu Jan 10, 2019 12:26 pm

Thank you all for the replies.Yes I meant deduct the IRA contribution,

wife does not have work 401K.

Do you think its a good idea to do a small % in Roth 401k? I am able to also fully max out the Roth IRA @12K total for both (6 each).

Or should i just stick to 19K 401K+ 19K 457B and Roth @12K?

If i change a small % of 401k from Pre to Roth 401K, I dont think I would be paying a lot more $$ in tax due to fact that I already do pretax 401k + 457B close to 38K

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