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ROTH IRA Salary maximum- is this gross earnings or federable taxable gross? Archived From: Finance

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alert mods    
   posted: Dec. 27, 2006 @ 1:07p

If the salary maximum for a single to contribute to a ROTH IRA is 95K a year, is this 95k gross earnings or federable taxable gross?

Lets say I make a base of 95K and my bonus is 5K this year. Does that make me not able to contribute to my ROTH IRA this year? What if I were to take the 5K and stick it in my 401K. Would I still be able to contribute to the ROTH IRA?


   posted: Dec. 27, 2006 @ 1:07p

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alert mods    
   posted: Dec. 27, 2006 @ 1:09p

It's pretty clear on the IRS website -- Link here -- that it's AGI that is considered to be the cap number.


alert mods    
   posted: Dec. 27, 2006 @ 1:45p

pjhartman said:It's pretty clear on the IRS website -- Link here -- that it's AGI that is considered to be the cap number.No, actually, it's quite clear from Publication 590 that you linked to that it's modified AGI that matters. See Worksheet 2-1 for the steps to go from AGI to modified AGI. (There aren't a lot.)

Since 401(k) contributions come out of AGI (in fact, out of gross), yes, contributing to a 401(k) plan would let you qualify for a Roth IRA contribution. But note that you do qualify for a reduced Roth IRA contribution with MAGI up to $110,000.


alert mods    
   posted: Dec. 27, 2006 @ 2:17p

LH2004 said:it's modified AGI that matters. See Worksheet 2-1 for the steps to go from AGI to modified AGI. (There aren't a lot.)One big item that is included in AGI and is not in MAGI is taxable IRA conversions (going from traditional to Roth). My AGI will be much higher than MAGI this tax year since I'm converting a bunch of old pretax retirement plans (401k, etc) to Roth IRAs. I'll still be contributing to a Roth as long as I can get under the MAGI cap.


alert mods    
   posted: Dec. 28, 2006 @ 7:06p

Is the cutoff for opening a Roth for 2006 the end of the calendar year (12/31), or can you still open a Roth IRA into 2007 (for 2006)?


alert mods    
   posted: Dec. 28, 2006 @ 7:08p

fpwq49a said:Is the cutoff for opening a Roth for 2006 the end of the calendar year (12/31), or can you still open a Roth IRA into 2007 (for 2006)?

You can open a 2006 Roth IRA in 2007 until tax day.


alert mods    
   posted: Dec. 28, 2006 @ 7:34p

also keep in mind that if you'd like to contribute to a Roth but your MAGI is to high, you can likely contribute to a non-deductable traditional IRA, then convert in 2010 to a Roth under current law.

see this thread for more info:

http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=628604&highlight_key=y&keyword1=2010+ira


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