401k – TIRA – RIRA Contributions Question

Submitted by Kevin WOlter on Tue, 2020-06-09 23:56

Hi – I may be pushing my luck asking for too much detail but below is my scenario and questions.
If anyone is able to help – Thank You!

• My filing status is single
• I live and file my taxes in California.
• I do not own a home – I rent.
• I have a W2 job. W2 income each year is roughly 210K to 250K.
• This W2 job has a 401K plan through my employer and they match up to 4 or 5%.
• So far this year I have contributed about 10K to this 401K.
• I plan to continue contributing to this 401K throughout the year until I reach the max of $19,500.

• In addition, I HAD an old 401K from a previous employer with about 50K in it. I just rolled that into a traditional IRA.

• I then opened a self-directed IRA and directly transferred 25k from the traditional IRA into this self-directed IRA.

• In summary I have the 401K through my employer and a traditional IRA and a self-directed IRA.

(Questions#1):
I want to contribute more money into either the traditional IRA or the self-directed IRA. This money would come out of my personal checking and savings bank account. Can I do this and if yes how much can I contribute?

Questions#2):
If the answer to #1 above is no, could I open a new Roth IRA and contribute to it? If so how much?

Thank you!

PS. I do not know if it matters but I also have a small start-up business with my brother. We are equal partners and it is an S-Corp based in California as well. We will ether show a loss or just a little bit of income (i.e if any income it would be under 30K total this year). We do not have any retirement accounts set-up for this business.



Submitted by Alan - IRA critic on Wed, 2020-06-10 00:43

  1. You can contribute 6000 to a TIRA, but due to your income level and participation in the 401k, this would have to be a non deductible contribution. 
  2. Your income is also too high to make a regular Roth IRA contribution.
  3. You have probably heard of back door Roth IRAs in which you make the non deductible contribution referred to above, and then convert it to Roth. However, for this to be beneficial you cannot have other non Roth IRAs, and you have two. To eliminate them you would have to roll them into your current 401k plan if the plan accepted IRA rollovers. You could then convert the 6000 non deductible contribution to Roth tax free, effectively making your 6000 non deductible TIRA contribution into a Roth contribution via conversion. 

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