Author Topic: Another "Which type of IRA is best for me?" question!!  (Read 1249 times)

Madams135

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Another "Which type of IRA is best for me?" question!!
« on: April 06, 2017, 09:43:56 AM »
Hi again! I am in desperate help of some IRA advice as I am coming up on the deadline. I plan to open an IRA account with Vanguard and need to decide tIRA or Roth. Since I am single and made $80k last year, I cannot deduct any contributions to a tIRA (i've already filed taxes regardless, so these will be non-deductible). I am already planning on maxing out my t401K through my employer, which matches 4.5% of my first 6%. Here are some of my predicaments/situations:

-28 Y.O
-$10k in student loans at 4.5% (reduced from $60K at 5-9% in 2 years)
-$23k in t401k (Plan to max in 2017)
-No home, but may plan to buy in 3-5 yrs. Would possibly need to tap fund for 20% downpayment.
-$15k in 3% checking
-Hourly job yields $45k/ year, but with extensive OT grossed $80K 2016, on pace for $100K 2017
- Under staffed at work and OT is likely stable, but you never know. Also cannot keep this pace up long term!
-Exploring changing jobs, in which I may need to move my t401k (Fidelity- not sure if I would be forced to roll into tIRA)
-Intrigued by idea of early retirement / FIRE.  May need to use loopholes to tap funds in 10-20 years.

Sorry for the exhaustive, complicated list, I unfortunately do not have the time to be as well read on these topics as I wish. So I ask, is the Roth or tIRA better for me? If I change jobs it will be a no-brainer to go tIRA for deductions, but I also need help for 2016. I do not want to run into any roadblocks that I am unaware with as well if I decide to tap the funds for a home/ early retirement. Any thoughts would be GREATLY appreciated as always!!!

Proud Foot

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Re: Another "Which type of IRA is best for me?" question!!
« Reply #1 on: April 06, 2017, 10:12:37 AM »
Put the 2016 contributions into a Roth.  For 2017 there are too many moving parts such as your overtime and if you end up changing jobs to make a good suggestion right now. You could always put them in a Traditional IRA and then re-characterize them once you do your tax calculations.
 

MDM

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Re: Another "Which type of IRA is best for me?" question!!
« Reply #2 on: April 06, 2017, 07:39:51 PM »
...I cannot deduct any contributions to a tIRA.

So I ask, is the Roth or tIRA better for me?
If tIRA deductions are not allowed, Roth is always better.  Go through the front door if your income allows, or use Backdoor Roth IRA if needed.

If your income drops, see Traditional versus Roth - Bogleheads for the considerations.