Check my MAGI math

[apdale]

Long time reader, but first time poster.  I've got a question on my math, I'm having trouble finding a definitive answer online and thought someone here would be able to help.  This is for 2016 taxes, not 2015, we have increased our pre-tax contributions a lot this year and I'm hoping we will now qualify for a tIRA to further reduce our tax liability.

Filing MFJ.

tIRA limit for it to be fully deductible in 2016 for individuals with employee sponsored retirement plan is $98k.

Income:
me: $87k
wife: $53k

401k contributions:
me: 18k
my employer: 5220 (Pretty sure this doesn't add or subtract anything)
wife: 18k

457 contributions:
me N/A
wife: 18k

Defined Pension plan contribution pre-tax contributions:
me: N/A
wife: $7k (Kentucky Teacher Retirement)

HSA contributions:
me: $2850
my employer: $500
wife: N/A

What I think the math is: 87k + 53k - 18k - 18k - 18k - 7k - 2850  = $76,150

Is that right?  My big question is on the defined pension plan and whether it contributes to the MAGI or not.  I'm pretty sure the 401ks, 457, and the HSA are correct.

This will allow us to contribute $5500 each to a tIRA and fully deductible the contributions, right?

I'm hoping to cash out a life insurance policy later this year that would also increase our MAGI (this was given to me by my grandparents, not something I chose to invest in).  I only want to do this if it doesn't prevent us from fully deducting our tIRA contributions.

Any help would be greatly appreciated.  If anyone sees any pre-tax contribution options we may have missed that would be great too.  I'm pretty sure we are maximizing those right now.

[terran]

It sounds right to me, but I'm also not sure about the pension. I've found this (https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Return/What-Is-the-Difference-Between-AGI-and-MAGI-on-Your-Taxes-/INF22699.html) helpful in the past, but it doesn't specifically mention pensions. I am pretty sure about the rest of it though, and since you'd be at $83,150 without subtracting the pension I think you're good.

Can you see what effect the pension has on your wife's W2?

[apdale]

The pension definitely reduces Box 1 on the w2, is that what you were referring to? Or is there a different box I should be looking at?

[redcedar]

The pension definitely reduces Box 1 on the w2, is that what you were referring to? Or is there a different box I should be looking at?

That is the correct box so you are right to use it as a reduction in your MAGI calculation. Looks like you are well under the MAGI limit for tIRA contribution and have room to spare which is great for future income raises.

Is your wife a teacher or does she have 401k+457 from another type of govt job? If a teacher, remember to use $250 Teacher Expense deduction in your MAGI calculation if she has those expenses (every teacher seems to). Also, can she switch to HDHP in the future so that you can jump to the family HSA max contribution and lower your MAGI another ~$3200?

[apdale]

Great news!

She is a guidance counselor, so I don't believe she can claim that credit. Thanks for the tip though.

Sadly her employer does not offer an HSA and my employer has a penalty of $100/month to add a spouse on my health plan if the spouse has an employer sponsored Healthcare plan. Will keep an eye on her future offerings and see if an HSA is offered on the future though for sure.

Definitely wanted some extra room so that makes me feel a lot better about going ahead and contributing to a tIRA for 2016 rather than waiting until 2017 and making a 2016 contribution.

[Ebrat]

It looks like you should be fine.  Remember that you can always recharacterize some or all of it to a Roth later if you hit the MAGI limit, so worrying about that shouldn't stop you from contributing now.

[apdale]

That is very true.

I appreciate the fast and helpful responses from everyone!