contribution limits
If I have a client that is contributing to his companies 401K, he is eligible to contribute to an IRA or is there a total amount (a total dollar amount between the 401k & IRA) that he is eligible to contribute, besides the obvious IRA contributions limits.
Permalink Submitted by Alan Spross on Fri, 2012-11-16 02:07
He can contribute to a TIRA, but may not be able to deduct it if his income exceeds a specified amount. This is also true for a Roth IRA contribution.
Does he file jointly or single?
Permalink Submitted by Eric Woodfill on Fri, 2012-11-16 17:20
He files jointly and earns about $170k per year. I guess my real question was, if he contributes the max to his 401K and he is within the income limits to deduct the IRA contribution, can he contribute the full amount to his 401K and his IRA?
Permalink Submitted by Alan Spross on Fri, 2012-11-16 18:32
Yes, he can contribute to both, but cannot deduct the IRA contribution. For a Roth contribution the modified AGI phaseout range is between 173k and 183k. If his gross income is before the 401k contributions, then 170k less 17k is 153k. Since 153 is under the 173k phaseout range, he could make a full Roth IRA contribution. A Roth IRA contribution is better than a non deductible TIRA contribution.
Permalink Submitted by Eric Woodfill on Mon, 2012-11-19 13:37
Thank you very much