Author Topic: Contribution limits 2017--401k and IRA 54k combined?  (Read 2108 times)

BiotechGuy

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Contribution limits 2017--401k and IRA 54k combined?
« on: April 02, 2017, 10:35:56 AM »
Need some help here, guys and gals. My income is too high for a deductible IRA. I'm maxing out my pre-tax 401k and using the mega backdoor on after tax 401k contributions up to the 54k limit. Then I've been moving to a taxable account. I haven't put anything into a non-deductible IRA, ever, but reading this through I'm thinking I should be doing that too and using a backdoor roth conversion to get that into my Roth IRA too. Thoughts? Isn't the backdoor and mega back door basically doing the same thing for me in my case? Are there any limits or things I need to consider if using both those options in the same year? To clarify---does that 54k limit for 2017 include the IRA? If that's the case I'm guessing I was right to move to taxable, if not, I'm not so sure...

I'm shooting for 75k/yr after tax income in retirement, so I'm not expecting super low or nonexistent federal taxes. Maybe that extra 5k is better off going into a taxable account because 1) both are after tax investments, 2) long term cap gains rate and my fire rate seem like they might be roughly similar, and 3) normal taxable account has no restrictions around withdrawals. That 3rd point, my taxable account, was my plan for covering a good part of my expenses for the years between 'retiring' and reaching 59.5 yrs old. Help!

MDM

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Re: Contribution limits 2017--401k and IRA 54k combined?
« Reply #1 on: April 02, 2017, 11:25:18 AM »
See 401k, IRA and Roth IRA Contribution, Eligiblity, Income and Tax Deduction Limits | Saving to Invest for one source confirming the IRA and 401k limits are separate.

BiotechGuy

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Re: Contribution limits 2017--401k and IRA 54k combined?
« Reply #2 on: April 03, 2017, 10:34:26 AM »
See 401k, IRA and Roth IRA Contribution, Eligiblity, Income and Tax Deduction Limits | Saving to Invest for one source confirming the IRA and 401k limits are separate.

Thanks! Called Fidelity and they confirmed as well.

dandarc

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Re: Contribution limits 2017--401k and IRA 54k combined?
« Reply #3 on: April 03, 2017, 11:21:23 AM »
Backdoor Roth has a big "Gotcha" - be sure you have no traditional IRA money anywhere before attempting a backdoor Roth.  This may include SEP and SIMPLE IRAs if you have those.

If you do, the fix is usually simple - roll it into your 401K before doing the backdoor Roth.