Author Topic: Stop contributing to a Roth and switch to traditional?  (Read 886 times)

Reddleman

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Stop contributing to a Roth and switch to traditional?
« on: February 23, 2018, 12:25:57 PM »
My wife and I started contributing to our Roths years ago when we thought that it would be great not to have to pay taxes on the income in retirement.  Now I realize that:

1. Because of our frugality, our spending level/income required will result in us being in a lower tax braket after retirement.  So a traditional IRA would be a better option.
2. As our income creeps up, we may not be fully eligible for Roths soon, but would still like to use the traditional.

So can we just stop contributing to our Roths and just let them grow (and be ready for a backdoor later on) and instead open and begin contributing to a traditional IRA?    Is it fine to have both (Roth and Traditional) as long as you only contribute to one of them in each year?


ChpBstrd

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Re: Stop contributing to a Roth and switch to traditional?
« Reply #1 on: February 23, 2018, 01:23:18 PM »
1) Yes, we crossed over this threshold last year. As our incomes increased, the math switched to traditional. Probably the math indicated traditional for a while before that, but it is good to have my backdoor Roth pipeline in place as you mentioned.

2) Yes, if the math indicates it, simply put your $5,500 in the traditional IRA account this year instead of the Roth. You'll save your marginal 2017 tax rate by doing so.

Bonus points if you ask your broker to recharacterize last year's Roth contribution and move it to your traditional IRA. I did this in 2017. There's a form you fill out and a special tax document you receive. Do it before April 15.

3) Yes, you can contribute up to $5,500 into any combination of your Roth or traditional IRAs. E.g. $5500 Roth and $0 Traditional, $2750 Roth and $2750 traditional, or $0 Roth and $5500 traditional.

boarder42

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Re: Stop contributing to a Roth and switch to traditional?
« Reply #2 on: February 23, 2018, 01:27:19 PM »
yes its fine to have both

If you cant contribute to a roth you cant contribute to a traditional IRA and get the tax break

You should be maxing your 401k's TRAD at 18.5k each this will lower your income level and allow for roth IRA for longer

https://www.madfientist.com/traditional-ira-vs-roth-ira/
https://www.madfientist.com/how-to-access-retirement-funds-early/

Reddleman

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Re: Stop contributing to a Roth and switch to traditional?
« Reply #3 on: February 25, 2018, 07:40:14 PM »
Thanks, we're already maxing out our 401/403b, wife's 457, just trying to lower our taxible income as much as possible.