Author Topic: What to do about 2016 Partially Deductible Traditional IRA  (Read 1015 times)

jfer_rose

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What to do about 2016 Partially Deductible Traditional IRA
« on: March 05, 2017, 07:18:56 PM »
In 2016, I front loaded my Traditional IRA. I'm working on my taxes and am surprised to learn that my contribution is only partially deductible. That was unexpected-- I thought I was going to fall below the contribution limit.

A few year back (after discovering Mad Fientist) I re-characterized a Roth contribution to Traditional. Would it make sense to change the nondeductible portion of my contribution from Traditional to Roth? Is that even possible?

Thanks in advance!

jfer_rose

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Re: What to do about 2016 Partially Deductible Traditional IRA
« Reply #1 on: March 06, 2017, 06:04:40 AM »
Have I stumped the Mustachians, or did I just post this at the wrong time?

405programmer

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Re: What to do about 2016 Partially Deductible Traditional IRA
« Reply #2 on: March 06, 2017, 06:45:33 AM »
Hey! I had the exact same problem this past tax year.

Call up wherever you have your IRA (Vanguard / Fidelity) and tell them you want to recharacterize your initial contribution from traditional to Roth.

I had to call a couple different Vanguard numbers because you'll want to talk to someone who is more familiar with retirement accounts. The first couple of customer service people I talked to didn't know what I was talking about.

But yes your idea is the right one. Unless you're very close to the deductible limit (ex. If you're only missing 500 dollars in deductions then it's not probably worth it but if you're missing 1000 or more in deductions I would say the best option would be to make your whole 5500 Roth instead of traditional).

MDM

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Re: What to do about 2016 Partially Deductible Traditional IRA
« Reply #3 on: March 06, 2017, 07:27:57 AM »
You can do an IRA recharacterization - Bogleheads to match your deductible amount exactly.

jfer_rose

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Re: What to do about 2016 Partially Deductible Traditional IRA
« Reply #4 on: March 06, 2017, 05:33:51 PM »
Thank you both!