Roth IRA max AGI limitations question
I have been advised that Roth IRA contributions are not allowed for taxpayers filing jointly with adj gross incomes of over $166,000 for 2009.
I was ALSO under the impression that ALL Taxpayers were now elegible to have a Roth IRA regardless of income levels…
Which is correct?
IF the AGI limitations are correct, in fact discriminating against higher income folks, what do you suggest to place funds to “comply with” Mr. Slott’s
idea to put funds where they’ll not be taxed ever…ala a Roth Ira?
Thanks for help/suggestion
Permalink Submitted by Clyde Wolf on Wed, 2009-03-04 18:26
Suncomm1,
For 2009 contributions to a ROTH IRA, when your Modified Adjusted Gross Income (MAGI) is greater than $166,000 your contribution is limited. With a 2009 MAGI in excess of $176,000 you can not contribute to a ROTH IRA .
You can make an after tax contribution to a Traditional IRA (TIRA). In the TIRA your gains would be taxed when distributed from the IRA.
Begining in 2010, you can convert your TIRA to a ROTH IRA without regard to your MAGI. Doing the Conversion, you pay income taxes on the untaxed money that you convert. If you have any Pre-Tax IRAs, these would be considered as untaxed money along with gains from your after tax TIRA at the time of your Conversion to a ROTH IRA. Part of each Conversion amount would be pro-rated between your total pre-tax and after tax amounts in your TIRAs.