new IRA question/advice needed

[nurseart]

New to investing, apologize for any blunders...

We are MFJ 30, gross income this year will be about 120k which is significantly more than we are used to. For various reasons husband does not yet have an IRA and we are thrilled to change that.

I have some end of year funds available and plan to max our both our IRA's for 2017. Since our income will be pretty high I'm going to put them in traditional IRAs. I have a SIMPLE IRA through work with Ameritrade and rolled over an old IRA to Ameritrade this year, I will be staying with them for my contribution. My rollover IRA is in FSTVX which is where I plan to put my IRA contribution, for my SIMPLE I have some ETFs  (VOE, VTI).

For the husband, would you open a traditional IRA with Ameritrade, Vanguard, or Fidelity? Does it matter? Ameritrade would be convenient since they are who I have but Vanguard is known for low expenses. Ameritrade doesn't offer any referrals that would be relevant to us since we are just putting in the 5.5k

I'm thinking I would choose a low cost index fund for him. Would you go ahead and buy the funds all at once or over a couple of months (contribute funds now, but buy over time)?

Thanks!!

[dandarc]

Are you sure you can deduct the traditional IRA?

https://www.irs.gov/retirement-plans/ira-deduction-limits

At $120K gross, with a SIMPLE and maybe health insurance or some other deductions, I'm thinking you probably are OK for deducting, but you're close enough to look closely at that.  Good news is you're definitely in good shape for Roth IRA contributions, so if it turns out you're over for the traditional, you can make Roth contributions or recharacterize if you've already made traditional ones when the final numbers are in.  Since you're so close to the end of the year, you might wait to do 2017 IRAs until you know your final tax figures for sure.  Remember you can make contributions up to April 15th, so there isn't any hurry here.

Just buy all at once - we're talking about 1 years worth of IRA contributions for 2 people - $11K - that's really not much in the grand scheme of things, so not really anything to worry about.  Lump sum comes out ahead regardless, but just pointing out, even if you're inclined to dollar cost average for whatever reason, there isn't enough money here to make a huge difference.  Might seem like a lot of money if you're at the beginning, but soon enough you'll have 6 or 7 figures in investments and worrying about timing $11K will just seem silly.

ETA: Assuming you file jointly.  Filing separately is a big problem for IRA's, so ideally you're not doing that.

[nurseart]

Thanks for your response dandarc!

Since I have a retirement plan offered through my work I understand my AGI would need to be less than 99 to fully deduct with reduced deductions up to an income of 119. I had erroneously thought with the standard deduction I would be fine but, d'oh, it's either standard or itemize. I have the SIMPLE, max HSA contribution, mortgage interest and property taxes. I will take your advice and defer until I have my final numbers to see which would be best.

Yup, we file jointly so no issues there.

[dandarc]

The standard deduction or itemized deductions have nothing to do with eligibility for the IRA deduction - it is based on your MAGI (modified AGI).  Technically you take your AGI (number at bottom of page 1 of your 1040) and add certain things back, but I like to look at gross and what reduces that to get to MAGI.

SIMPLE and HSA reduce your gross when computing MAGI, as would most other pre-tax payroll deductions such as health insurance, dental, any FSAs that you might use.  Traditional IRA deduction itself doesn't help you get your MAGI under the limit.

So if you've got $12,500 for your SIMPLE and another $6750 for the HSA, you're pretty close - does husband have a 401K?  Do either of you pay health insurance premiums via payroll?