Author Topic: In and out of Roth IRA?  (Read 3255 times)

Cognitive Miser

  • Stubble
  • **
  • Posts: 133
In and out of Roth IRA?
« on: March 28, 2016, 12:33:18 PM »
I had to stop contributing to my Roth IRA when I got married in 2013 due to our combined income busting the limit.  Had a baby in 2014 so my income was reduced, but my spouse got a huge bonus that put us back over the limit.  Our 2015 income looks like it is right on the limit, we'll see when we're done doing our taxes.  I'm due with baby #2 in 2016 and forecasting that our income may again be at or under the limit.  We might be in the phase-out range, at least.  I am considering "retiring" (aka staying at home with my kids) when #2 is born, so it would be nice to give myself one last gift before my income goes away.

Has anyone else re-started contributions to a Roth after not being able to contribute for some number of years?  Did you encounter any problems with this situation?

nereo

  • Senior Mustachian
  • ********
  • Posts: 11509
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: In and out of Roth IRA?
« Reply #1 on: March 28, 2016, 12:38:00 PM »
Quote
Has anyone else re-started contributions to a Roth after not being able to contribute for some number of years?  Did you encounter any problems with this situation?

Yes, but for different reasons - I lived abroad and had no US income and was therefore not eligible to fund my IRA.

I had absolutely no problems whatsoever.  I simply went online to my brokerage (Vanguard) and started contributing again.  Easy-peasy.

What problems could you be anticipating?

Cognitive Miser

  • Stubble
  • **
  • Posts: 133
Re: In and out of Roth IRA?
« Reply #2 on: March 28, 2016, 12:41:26 PM »
I'm not sure what problems to anticipate.  I'm kind of a chronic worrier - I worry about unknown unknowns.

That's good to hear that you encountered no problems with Vanguard, as that is who my Roth is with.

tonysemail

  • Pencil Stache
  • ****
  • Posts: 722
  • Location: San Jose, CA
Re: In and out of Roth IRA?
« Reply #3 on: March 28, 2016, 01:01:15 PM »
I'm wondering if you know about back door roth iras.
is that something you've already looked into and ruled out for 2015?

There are a lot of posts about it, here is one page.
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

The main catch is that it would work against you if you have large non-roth IRAs.
for example, pre-tax iras that were rolled over from a prior employer's 401k plan.

forummm

  • Walrus Stache
  • *******
  • Posts: 7389
  • Senior Mustachian
Re: In and out of Roth IRA?
« Reply #4 on: March 28, 2016, 01:33:44 PM »
There's no problem with stopping Roth IRA contributions one year and then starting contributing again in some future year (as long as you remain eligible to contribute in that year--earned income, below the threshold, etc).

braje

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: In and out of Roth IRA?
« Reply #5 on: March 29, 2016, 01:56:15 PM »
so it would be nice to give myself one last gift before my income goes away.

Even if you are a SAHM you might be eligible to make contribution to your IRA.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11509
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: In and out of Roth IRA?
« Reply #6 on: March 29, 2016, 05:28:39 PM »
so it would be nice to give myself one last gift before my income goes away.

Even if you are a SAHM you might be eligible to make contribution to your IRA.
The OP didn't stop contributing because (s)he stopped working, but because they were over the collective limit for deductible contributions.

Cognitive Miser

  • Stubble
  • **
  • Posts: 133
Re: In and out of Roth IRA?
« Reply #7 on: March 30, 2016, 01:38:57 PM »
I'm wondering if you know about back door roth iras.
is that something you've already looked into and ruled out for 2015?

There are a lot of posts about it, here is one page.
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

The main catch is that it would work against you if you have large non-roth IRAs.
for example, pre-tax iras that were rolled over from a prior employer's 401k plan.

I did know about that, but for some reason I thought that if I didn't already have a tIRA, I couldn't set one up for the express purpose of backdooring my Roth.  And I don't already have a non-Roth IRA.  After following that link above, I see that I am actually in an ideal situation, and that people do in fact keep zero balances in their tIRA after backdooring their Roth.

Thanks!