The Money Mustache Community
Learning, Sharing, and Teaching => Taxes => Topic started by: RelaxationSpecialist on January 06, 2018, 07:56:27 AM
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This is the first year that we have maxed husbands 401k to $18,000 and both our Traditional IRA's at $5,500 each. (Yea us!!) In checking out tax calculators for 2017 to get an estimate on what we may owe extra in federal taxes, I keep seeing this come up....
"If you are covered by a 401k plan at work, you will receive no tax deduction for your contribution to an IRA."
Does this apply for both of our IRA's, or just my husbands as I do not have a 401k plan at my job?
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Just your husband, & his 401k contribution has already enjoyed being tax deferred. See if you can convert his tIRA contribution for 2017 to a Roth IRA — it’s forever tax free. Otherwise it’s not deductible & only tax deferred. You’ll need to decide if you need the deduction for your tIRA or also convert it to a Roth.
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Actually it depends on the income level you are earning at.
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https://www.google.com/amp/s/amp.cnn.com/money/2016/10/27/retirement/401k-ira-contribution-2017/index.html (https://www.google.com/amp/s/amp.cnn.com/money/2016/10/27/retirement/401k-ira-contribution-2017/index.html)
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Also:
https://www.google.com/amp/s/www.fool.com/amp/retirement/2016/11/05/ira-income-limits-for-2016-and-2017.aspx
(https://www.google.com/amp/s/www.fool.com/amp/retirement/2016/11/05/ira-income-limits-for-2016-and-2017.aspx)
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Yep, the income level at which you can deduct a traditional IRA contribution goes way down if you have a retirement plan at work. Above that level and you'll have to go Roth with your IRA.
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Yep, the income level at which you can deduct a traditional IRA contribution goes way down if you have a retirement plan at work. Above that level and you'll have to go Roth with your IRA.
Of course your ability to do a Roth also phases out, but at a higher income level.
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Yep, the income level at which you can deduct a traditional IRA contribution goes way down if you have a retirement plan at work. Above that level and you'll have to go Roth with your IRA.
Of course your ability to do a Roth also phases out, but at a higher income level.
The backdoor Roth is always an option though.
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Thanks for all the answers!! Going to hold on to the fact that this was an epic year for earnings, and I'll just have to hand over more federal tax $$$$ then I thought. :)