Should I do Deductible tIRA or Roth IRA - please see below

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elderwise
Posts: 83
Joined: Fri Jul 22, 2016 10:27 am

Should I do Deductible tIRA or Roth IRA - please see below

Post by elderwise » Sun Jan 07, 2018 11:50 am

So for 2018, I am planning to defer max 18.5 to 401k, 18.5 to 457B Govt, I confirmed the limits are exclusive due to Govt plan.

I make 90K gross, MFJ so I qualify for Roth IRA or t IRA, my question is I know I fall under the limits of the AGI For phase out.

Should I be doing ( i am tilting towards a yes need assurance / confirmation) a deductible tIRA and then convert it immediately to Roth IRA?

Also for 2017, i did do Roth IRA 5.5 K for both me and wife, and I only realized later that I could possibly be doing t IRA and could convert into Roth IRA, is doing this still feasible to reduce taxes or not worth the hassle? Is it still possible to undo - the contribution then - redo it for 2017 (as Roth IRA --> to tIRA --> Roth IRA)

Thank you, for your time and advice.

kaneohe
Posts: 5097
Joined: Mon Sep 22, 2008 12:38 pm

Re: Should I do Deductible tIRA or Roth IRA - please see below

Post by kaneohe » Sun Jan 07, 2018 11:59 am

If you are eligible to contribute to either w/o phaseout problems, what is the point of contributing to TIRA and then converting as opposed to contributing directly to Roth? Yes , you get a deduction for contributing to TIRA but then you negate that by doing the conversion so all you've done is complicated your life and kept somebody employed/busy.

https://www.irs.gov/pub/irs-pdf/f1040.pdf Roth conversion (distribution from TIRA) reported on line 15b) as income negates the
TIRA deduction on line 32 with no net gain.
Last edited by kaneohe on Sun Jan 07, 2018 12:15 pm, edited 1 time in total.

retiredjg
Posts: 34164
Joined: Thu Jan 10, 2008 12:56 pm

Re: Should I do Deductible tIRA or Roth IRA - please see below

Post by retiredjg » Sun Jan 07, 2018 12:00 pm

No. If you want your money in Roth IRA, put it there directly.

There is no reason for you to go through a tIRA to get to Roth IRA. If you deduct it from taxable income and then convert it to Roth it is the same as never deducting it in the first place.

elderwise
Posts: 83
Joined: Fri Jul 22, 2016 10:27 am

Re: Should I do Deductible tIRA or Roth IRA - please see below

Post by elderwise » Sun Jan 07, 2018 12:37 pm

kaneohe wrote:
Sun Jan 07, 2018 11:59 am
If you are eligible to contribute to either w/o phaseout problems, what is the point of contributing to TIRA and then converting as opposed to contributing directly to Roth? Yes , you get a deduction for contributing to TIRA but then you negate that by doing the conversion so all you've done is complicated your life and kept somebody employed/busy.

https://www.irs.gov/pub/irs-pdf/f1040.pdf Roth conversion (distribution from TIRA) reported on line 15b) as income negates the
TIRA deduction on line 32 with no net gain.
Oh, thank you I did not know that.Yes its useless, i might as well just do the R-IRA.

Thanks!

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