Author Topic: Traditional or Roth?  (Read 2137 times)

DaMa

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Traditional or Roth?
« on: February 05, 2015, 06:17:39 PM »
Hi,

I just realized that I could take a partial deduction for a Traditional Roth IRA for 2014.  I have the $5500 already in my Roth IRA, but I'm pretty sure Vanguard will reassign it.  It's worth about $600 in tax savings.  I already filed my taxes on a 1040EZ.  Should I go ahead and file an amended return?  Is there any reason not to?  This is the first time my income has been low enough for this to come up -- due to being single and upping my 401k contribution.  I think I'll end up in this partial range for the next several years.

Thanks for the help!

Gone Fishing

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Re: Traditional or Roth?
« Reply #1 on: February 05, 2015, 06:45:41 PM »
Yes.

kpd905

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Re: Traditional or Roth?
« Reply #2 on: February 05, 2015, 06:47:32 PM »
I had to amend a return last year, and while it wasn't the most exciting activity, I'd definitely do it for $600.

seattlecyclone

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Re: Traditional or Roth?
« Reply #3 on: February 05, 2015, 07:04:38 PM »
The general rule of thumb here is that traditional is better at the 25% bracket or higher, while Roth is better in the 10% bracket or lower. In the 15% bracket you could go either way. Based on your $600 number, are you in the 10% bracket?

Gone Fishing

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Re: Traditional or Roth?
« Reply #4 on: February 05, 2015, 07:08:58 PM »
Be sure to check your state returns as well.

DaMa

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Re: Traditional or Roth?
« Reply #5 on: February 06, 2015, 08:56:33 PM »
I'm in the 25% bracket.  Based on further research, it seems obvious that Traditional is the way to go.  I've believed for years that Roth was better, because taxes have to go up in the future.  I never really thought about it from the point of how much money will I be pulling out each year.  I'm learning so much from Mustachians.  Thank you!