tIRA contributions

[spaniard999]

Sorry if my question is stupid. I have been looking for it and found nothing.

My company handles the pay stubs through WorkDay. I was looking for a way to contribute to a traditional IRA (pretax) from there but I didn't find a way
My concern is that, if I contribute after tax money with a transfer from my bank, lets say for 2019 I contribute $6K, that would mean that I contributed more than 6K$ pretax ($6K pretax < $6K after tax).

So how do I fix that? What am I missing?

[Cromacster]

tIRA contributions are made with post-tax money and they are not linked to your employer.  You deduct the contribution amount on your taxes when you file.

So nothing to fix, just start transfering money from your bank to your IRA.

[spaniard999]

Okay so I pay with after tax money.
But if I contribute $6K, then how much does it affect my MAGI? just $6K less? Why is that?
If I am paying with after tax dollars, then the pretax value of that is somewhat higher and thats the amount it should be affecting my MAGI.

[MDM]

Okay so I pay with after tax money.
But if I contribute $6K, then how much does it affect my MAGI? just $6K less? Why is that?
If I am paying with after tax dollars, then the pretax value of that is somewhat higher and thats the amount it should be affecting my MAGI.

Which MAGI?

The MAGI calculation for Roth IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230985
Then see Retirement Topics IRA Contribution Limits | Internal Revenue Service.

The MAGI calculation for traditional IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230489.
Then see IRA Deduction Limits | Internal Revenue Service

[dandarc]

Okay so I pay with after tax money.
But if I contribute $6K, then how much does it affect my MAGI? just $6K less? Why is that?
If I am paying with after tax dollars, then the pretax value of that is somewhat higher and thats the amount it should be affecting my MAGI.

Which MAGI?

The MAGI calculation for Roth IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230985
Then see Retirement Topics IRA Contribution Limits | Internal Revenue Service.

The MAGI calculation for traditional IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230489.
Then see IRA Deduction Limits | Internal Revenue Service

Or maybe it is affordable care act MAGI.
https://www.healthcare.gov/income-and-household-information/income/

OP - Unless you or your employer is doing something wrong with the paperwork, whether an IRA is done via payroll deduction or from your checking account shouldn't change the amount of any taxes.

[Nothlit]

Okay so I pay with after tax money.
But if I contribute $6K, then how much does it affect my MAGI? just $6K less? Why is that?
If I am paying with after tax dollars, then the pretax value of that is somewhat higher and thats the amount it should be affecting my MAGI.

It affects your AGI. Assuming you qualify to deduct the full $6k, it would reduce your AGI by $6k. That's how contributions made with "after-tax" dollars become "pre-tax"

[Boofinator]

tIRA contributions are made with post-tax money.....

I think a much better way to put it is that tIRA contributions (that are fully deductible) are made with pre-tax money; however, for typical employees who have taxes withheld by their employer, they are also post-tax withholding, which is perhaps what you were implying. But tax withholding can be decreased to account for the tIRA, hence pre-tax.

OP: Others have given good links to tIRA deduction limits. If you are having trouble determining whether you might fit within those limits, I would go ahead and just start the tIRA, and if during tax time you exceed the limits, recharacterize as a Roth IRA:

https://www.irs.gov/retirement-plans/ira-faqs-recharacterization-of-ira-contributions