Also remember that you don't have to guess right on the tIRA vs Roth. You can re-characterize all or part of your contribution by your tax filing deadline. If you file your taxes on time, they even give you an automatic extension for this, so you've got until October 15, 2016 to do the recharacterization, although I'd want to have it done by April 15 so I didn't have to also file an amended return.
Wait, what?
I had no idea dandarc that I could do this. I've been grumbling lately that I suspect DW and I overpaid income taxes last year by contributing to roths on auto without thinking about our slightly higher income was maybe going to bump us up to 25% marginal tax rate, and could have saved by going traditional instead. And our tax preparers had nothing to say about this either... Looks like I'll be finally learning how to do our taxes myself.
glad I clicked on this thread
Just make sure as noted on this thread that there is an income limit (strictly speaking a MAGI limit) to be able to deduct contributions to a tIRA.
And yup, recharacterizing is a great trick. I'm borderline 25% bracket with no workplace retirement plan. I want to make tIRA contributions until I'm just inside the 15% bracket, so instead of waiting until March or something to make a contribution for the previous year, I just contribute to either of my IRAs without worrying about how I should split my contributions between them, if at all. Then come tax time, I figure out how much I want to recharacterize, if any, and then call up Vanguard to get that done.
Yes thanks, I have done some reading about income limits for contribution deductions, and up until last week, I knew the answer to our household was full deduction up to 183k (DW has 403b, I do not) so we WERE all set.
But- (and I'm sorry if I'm hijacking the thread here, but the question and answer may be of interest to people following) as of tomorrow, my status changes slightly- I will be newly a part of a large institution with a pension (I must wait 4.75 years to be fully vested, question on this later) and a 403b option (no employer match from what I can tell).
So a question- does the existence of a 403b OPTION (with no match and only expensive fund options from what I can tell right now) mean that DW and I are now subject to the much lower 98k income limits for tIRA deductions? Are the income limits contingent on the OPTION or my PARTICIPATION?
Also, does the existence of the pension matter at all to the above discussion? Especially if I have no benefit until 4.75 years?
Sorry for the wandering questions here- obviously there's a lot for me to learn...