Active Participant in 401k Plan.
If I am maxing my salary deferral amounts in my 401k with the Hospital, can I contribute to a traditional IRA?
If I am maxing my salary deferral amounts in my 401k with the Hospital, can I contribute to a traditional IRA?
Permalink Submitted by Alan - IRA critic on Wed, 2013-05-29 23:41
You can contribute, but if your modified AGI is too high for your marital filing status you cannot deduct the contribution. First you need to know your estimated modified AGI for this year. If your income is too high for the deduction and not too high for a Roth IRA, the Roth contribution would be better than the non deductible TIRA contribution.
Permalink Submitted by Kevin Zoltek on Fri, 2013-05-31 13:37
I am single making $200,000 per year. That appears to take out the Roth IRA. So, if I continue to contribute to a TIRA, are there addl forms that I need to report to the Gov’t to separate these contributions?
Permalink Submitted by Alan - IRA critic on Fri, 2013-05-31 16:52
Yes, that income it too high to deduct a TIRA contribution OR make a regular Roth contribution. That leaves only a non deductible TIRA contribution as your IRA option. You must report these contributions on Form 8606 each year you make one. You can then convert that contribution to a Roth IRA as there are no longer any income limits for conversions. The conversion is also reported on Form 8606. If you have no pre tax IRA assets the conversion is tax free. But if you have pre tax IRA assets such as a rollover IRA or SEP IRA, then you conversion will be mostly taxable. The taxable portion is computed using Form 8606 as well.