In 2017, my wife had no income (babies at home), and I think I made a crucial error in my assumptions. With the market rise last year, I purposely switched my 401k contributions to pre-tax and then sold some securities to lock in the 0% rate up to the top of the 15% bracket. I planned on splitting IRA contributions between Roth/traditional to pull me back under the 15% bracket if needed. However, at the time I really didn't fully grasp the 99k MAGI IRA deductibility limit and didn't realize that while 401k contributions pull your MAGI down, IRA deductions do not.
It seems my MAGI will be ~105130, significantly over the 99k IRA deductibility limit since I participate in a 401k and only slightly over the top of the 15% bracket for me (104800).
Filing status: MFJ
Exemptions: 4 (2 children)
Itemizing: n/a - we take the standard deduction of 12.7k as our itemized deductions only totaled 12.4k last year.
Neither of us are self employed, so SEP-IRAs etc. seem to not be possible.
I have not yet made any Roth IRA or tIRA contributions for 2017.
I have already made max 2017 HSA contribution (6750) through payroll deduction.
For flexibility, my 401k plan does allow rollovers into the plan from tIRA or Roth IRA accounts and my 401k options are very good.
- For future reference, if our combined MAGI is above the 99k limit but my wife has income of her own and is not covered by an employer retirement plan, can she make deductible IRA contributions up to the lesser of the IRA contribution limit or her total income?
- How do others try to 'hit' the bracket limits? Any tips on how to do year-end tax planning when you don't have all the forms yet? I'd rather have a plan for 2018 instead of getting somewhat lucky like I did this year.