Quick IRA Question before tax deadline

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cresive
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Quick IRA Question before tax deadline

Post by cresive » Mon Jun 29, 2020 7:31 pm

Thank you for helping me with this issue. I have a two-part question concerning IRA limits for the 2019 tax year.

Scenario:
Status: Single with workplace 401K
Age: 58
MAGI: 130,000

I have run some calculations and have determined that I am eligible to contribute to a Roth IRA, but at a reduced level. Instead of the $7,000 limit, I can only contribute up to $3,270.

Question 1: Can I contribute the remaining limit into a traditional IRA? For instance:
$7,000 - $3,270 = $3,730 eligible to contribute to my trad IRA.

Question 2: Would it be worth the hassle to re-file my 2019 taxes with the reduced income from the traditional IRA donation? I JUST realized that I could donate to my Roth, even though I filed my taxes over a month ago. In the future, I will do this when I file.


Thank you,
Ben

mhalley
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Re: Quick IRA Question before tax deadline

Post by mhalley » Mon Jun 29, 2020 7:54 pm

You could contribute, but it would be non deductible. In general, contributing to a non deductible ira is not recommended unless doing a backdoor Roth. If you have no trad ira, just do a backdoor Roth for the entire amount.

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cresive
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Re: Quick IRA Question before tax deadline

Post by cresive » Mon Jun 29, 2020 8:24 pm

mhalley wrote:
Mon Jun 29, 2020 7:54 pm
You could contribute, but it would be non deductible. In general, contributing to a non deductible ira is not recommended unless doing a backdoor Roth. If you have no trad ira, just do a backdoor Roth for the entire amount.
Why would it be non-deductible?

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Flobes
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Re: Quick IRA Question before tax deadline

Post by Flobes » Mon Jun 29, 2020 8:37 pm

cresive wrote:
Mon Jun 29, 2020 8:24 pm
mhalley wrote:
Mon Jun 29, 2020 7:54 pm
You could contribute, but it would be non deductible. In general, contributing to a non deductible ira is not recommended unless doing a backdoor Roth. If you have no trad ira, just do a backdoor Roth for the entire amount.
Why would it be non-deductible?
Chart in this IRS document shows limits to IRA deductibility:
2019 IRA Deduction Limits - Effect of Modified AGI on Deduction if You Are Covered by a Retirement Plan at Work

kaneohe
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Re: Quick IRA Question before tax deadline

Post by kaneohe » Mon Jun 29, 2020 8:40 pm

Generally TIRA deductions phase out before Roth contribution phaseout so if you are being limited in Roth contributions, your TIRA deductions are 0.

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cresive
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Re: Quick IRA Question before tax deadline

Post by cresive » Wed Jul 01, 2020 8:54 am

Thanks for the great, albeit disappointing, information

retiredjg
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Re: Quick IRA Question before tax deadline

Post by retiredjg » Wed Jul 01, 2020 9:19 am

Agree with the others. You can put the extra money into tiRA but it will not be deductible because you make too much money.

Also, you can still contribute to Roth IRA even though you have filed your taxes - that is not documented on your taxes anyway.

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Eagle33
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Re: Quick IRA Question before tax deadline

Post by Eagle33 » Wed Jul 01, 2020 10:07 pm

cresive wrote:
Wed Jul 01, 2020 8:54 am
Thanks for the great, albeit disappointing, information
You do not get any deduction when doing a direct Roth contribution. Why disappointed no deduction on a backdoor contribution?
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

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