Hi folks,
My wife and I currently have Roth IRAs and 403bs. I'm thinking that Traditional IRAs are really the way to go, because 1) we are now near the "peak" of our earning years and 2) the Roth pipeline. I've looked into it with the IRS, and your ability to deduct the IRA contribution is based on your modified AGI.
Here are the rules (from IRS form 590):
And here is how they define the modified AGI:
My wife and I (married, filing jointly) earn a total of ~$105,000. We both participate in employee sponsored retirement plans and also max out our 403b's (35K). Am I right that this lowers our modified AGI to below the limit of $95,000? In doing the modified AGI worksheet, the only thing we need to add is about $400 of student loan interest deductions (#2). And the AGI (#1) we had in 2013 (when our income was similar) was $74K. I just want to make sure that the modified AGI doesn't include our 403b contributions, because that would put us over the full deduction limit.
I want to make sure I understand this properly before creating traditional IRAs and recharacterizing our 2014 Roth contributions. If we're not eligible to deduct it, then I'm just going to stick with the Roth.
Thanks! And if you need any additional info, just ask.