Maximum 2025 Roth IRA from pay checks
I am still working and plan to retire in early 2025. I want to contribute maximum to my and spouse’s Roth IRAs (2x$8,000) before leaving work. Which deductions should I subtract from the gross pay in a pay stubs to arrive at the earnings eligible for Roth IRA contribution? They take out my share of medical, dental, and vision insurance. I am also enrolled in FSA, pre-tax 401k with catch-up and accident insurance. I am also subject to CA Vpdi.
Permalink Submitted by Alan - IRA critic on Fri, 2025-02-07 14:19
If you are paid on a W-2, the amount in Box 1 (less any amount in Box 11) is treated as taxable compensation that can be used for an IRA contribution. No other adjustments are needed.
Pre tax 401k, FSA and pre tax health premiums have already reduced the Box 1 amount. But if you are going to retire early in 2025, you may have to use your 2024 W-2 forms to project what % of your gross income was included in the 2024 W 2 and apply that to your 2025 gross since you will not get your 2025 W-2 for another year.
Of course, if you over contribute, you can remove the excess contribution for 2025 up to 10/15/2026. Or you could wait and make your 2025 contributions early next year after you get those W-2 forms.