IRA contributions 2012 options including Company 401k Plan
59 year old has a company 401-K plan in which client has contributed $7,800 for 2012 which is enough and a little more to get the max company match. Can the employee also make an additional contribution by April 15th of 2013 for 2012 to either his Roth IRA or his Traditional IRA, and if so, how much additional can be made and does it matter which IRA he chooses for the additional contribution?
Permalink Submitted by Alan - IRA critic on Mon, 2012-12-31 00:59
He can definitely make IRA contributions for 2012 up to 4/15/2013, but with limited information it is not possible to determine which type IRA contribution is most beneficial. What is client’s estimated modified AGI and marital status for 2012? He may not be able to deduct a TIRA contribution and if so, a Roth contribution would be a better option than a non deductible TIRA contribution. But if his modified AGI is too high, he may not be able to make a Roth contribution either.
Permalink Submitted by Steve Sarovich on Mon, 2012-12-31 01:35
Modfied AGI for 2011 was about $750,000, but due to losses in sub S business 2012 should be about $200,000. Married Wife income is about $50,000. No dependents.If the Roth is out, that is fine. Can the additional amount be made to the other existing Traditional IRA account and if so, how much more?
Permalink Submitted by Alan - IRA critic on Mon, 2012-12-31 01:53
MAGI is too high for a Roth contribution, and neither spouse can deduct a TIRA contribution. That leaves a TIRA non deductible contribution as the only option, but they would have to track their basis by completing Form 8606 for each spouse that makes a contribution. Contribution limit is 5,000 for each plus 1,000 catchup for each spouse who has reached 50 by 12/31/2012. If they make these contributions, they can go into existing TIRA accounts.