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Subject:  Re: 401K/it's complicated! Date:  6/26/2013  5:28 PM
Author:  TMFPMarti Number:  118758 of 127753

I'm working as a contractor overseas. I don't pay federal taxes, claiming Foreign Earned Income Exclusion. My dh and I file jointly, so maxing out my IRA always gets me a return. Now being over 55 (better late than never), I want to put away more using a 401K I've recently become eligible for with my employer. Here's my question: am I wrong that if I invest the additional funds into my company's Roth 401K, I won't pay the taxes since I am claiming Foreign Earned Income Exclusion?


First, now that you're covered by a retirement plan at work the phaseout range for deductible traditional IRA contributions is lower than it used to be. See Chapter 1 of Pub 590 to see how you fare there.

As for Roth 401(k) contributions, they will not reduce your taxable income. If the FEEE is enough to cover your higher taxable salary you'll be unaffected.

I'd suggest that you use run some scenarios through software.

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