The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: tarheeldan on May 25, 2017, 02:57:13 PM
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Hi all! My income just went up (yaay!) but my AGI is now in the phaseout AGI range for Traditional IRA (boo!-ish)
Single, HoH
Salary: 85,000
Deductions (401k, health insurance, FSA): 19,600
AGI: 65,400 (right?)
I tried looking following Pub 590-A: 71,000-65,400 = 5600 * 0.55 = $3,080 as the deduction. But the Fidelity calculator comes up with $3,640.
1. Which one is right and how do I arrive at that calculation?
2. Let's say the deduction is $3,000. Should I then only contribute $3,000 to a Traditional IRA and the other $2,500 to a Roth? Or am I mixing ideas? What's the optimum thing to do?
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1. Which one is right and how do I arrive at that calculation?
For 2017, the range is $62K-$72K so the Fidelity calculator may be the correct one.
2. Let's say the deduction is $3,000. Should I then only contribute $3,000 to a Traditional IRA and the other $2,500 to a Roth? Or am I mixing ideas? What's the optimum thing to do?
Either contributing to a tIRA now and doing an IRA recharacterization (https://www.bogleheads.org/wiki/IRA_recharacterization) for the exact amount before filing next year, or waiting until next year to make the exact split on the tIRA vs. Roth, are reasonable choices.
You might as well get the largest tIRA deduction you can.
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Faced with the same situation I went Roth and chose not to fiddle futz around with partial deductions. KISS
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Thank you! I think I'll go with recharacterizing at tax time :-)