Ok here is the deal...
I just accepted a job offer making $61,000 a year that starts after I graduate from my masters program. I will be contributing about 30% of my income to 401k to take advantage of the allowable max. I will already be in the traditional IRA phaseout MAGI range because I am single. My industry has healthy raises so here is my predicted path to complete traditional IRA phaseout.
Year 1 31,000(half year of work), but technically I will not earn enough to max traditional 401k so won't start IRA..
Year 2 61,000 max traditional IRA contribution based on phaseout: $4,950
Year 3 65,000 max traditional IRA contribution based on phaseout: $2,750
Year 4 70,000 max traditional IRA contribution based on phaseout: 0
I will have student loan debt of $35,000. Despite this debt I have already decided to max out my 401k with $18,000 a year as a minimum savings goal. I am wondering if its worth the hassle to contribute to a traditional IRA and later have to convert it to a ROTH when I have student loan debt with an interest rate just under 6 percent(less interest deduction). If I understand completely I should be able to deduct all of my student interest from my income in Year 1-3, so should I even consider loan interest in my retirement planning at this point? Alternatively I could focus on paying the debt down faster when the full interest is no longer deductible...
I have read a lot tonight about the Roth/IRA debate, but I am wondering if some of the financially responsible people on this site would even bother dealing with the traditional contributions and later Roth conversions considering that I also have debt of $35,000. It seems like a lot of work(again roth conversions) for a fund that will have contributions less than $8,000 after 4 years.