Best Way to contribute to both Traditional and Roth IRA's?

[Philociraptor]

For the tax-savvy folks out there, what's the best way to contribute to both a Traditional IRA and a Roth IRA if your income (MFJ) falls between $98k and $118k? Which of the following is best, or are they equal?

1. Contribute $5.5k to each Traditional IRA on Jan 2nd. When filing taxes next year, find out how much we can deduct and have them recharacterize (Traditional to Roth) the amount we can't.
2. Contribute $5.5k to each Roth IRA on Jan 2nd. When filing taxes next year, find out how much we can deduct and have them recharacterize (Roth to Traditional) the amount we can.
3. Don't contribute on Jan. 2nd. When filing taxes next year, find out how much we can deduct and contribute that amount to each Traditional IRA, then the remainder of the $5.5k limit to each Roth IRA, for the previous tax year.

What do I need to do when tax time comes?

Inciting incident: I'm attempting to file my taxes using the free online fill-in forms this year for the first time. Our MAGI for 2015 is around $99.5k, so we can take a partial deduction ($5,010/$5,500). We contributed to Roth IRA's last year but I want to recharacterize what we can into Traditional so we can get a refund. I believe we will have to fill out a form for this, but I am not sure which one. We already contributed to new Traditional IRA's for 2016 because we thought our MAGI would be lower this year, but wife got a new job and will be making more than expected, so we will likely once again fall between $98k and $118k and only be eligible for a partial deduction.

[MDM]

Given the lack of a clear crystal ball (in other words, you don't know if the market will rise or fall in ~1 year), none of the three options are clearly better.

Under the assumption that the market tends to go up, option #1 seems best.  See https://www.bogleheads.org/wiki/IRA_recharacterization for details.

[seattlecyclone]

I tend to pick Option 3 because I have an irrational aversion to contacting customer service people on the phone, and recharacterizations often require this.

[MoonShadow]

For the tax-savvy folks out there, what's the best way to contribute to both a Traditional IRA and a Roth IRA if your income (MFJ) falls between $98k and $118k? Which of the following is best, or are they equal?

1. Contribute $5.5k to each Traditional IRA on Jan 2nd. When filing taxes next year, find out how much we can deduct and have them recharacterize (Traditional to Roth) the amount we can't.

You can't do this.  The annual contribution limit applies to all IRAs of any type, collectively.

[Philociraptor]

For the tax-savvy folks out there, what's the best way to contribute to both a Traditional IRA and a Roth IRA if your income (MFJ) falls between $98k and $118k? Which of the following is best, or are they equal?

1. Contribute $5.5k to each Traditional IRA on Jan 2nd. When filing taxes next year, find out how much we can deduct and have them recharacterize (Traditional to Roth) the amount we can't.

You can't do this.  The annual contribution limit applies to all IRAs of any type, collectively.

Each = my traditional IRA and my wife's traditional IRA in that statement.

[MoonShadow]

For the tax-savvy folks out there, what's the best way to contribute to both a Traditional IRA and a Roth IRA if your income (MFJ) falls between $98k and $118k? Which of the following is best, or are they equal?

1. Contribute $5.5k to each Traditional IRA on Jan 2nd. When filing taxes next year, find out how much we can deduct and have them recharacterize (Traditional to Roth) the amount we can't.

You can't do this.  The annual contribution limit applies to all IRAs of any type, collectively.

Each = my traditional IRA and my wife's traditional IRA in that statement.

Okay, nevermind.  I read that differently.

[mizzourah2006]

I am in your exact same boat and we do option 2. Contribute to the Roth and then find out what deduction we qualify for and recharacterize that amount.