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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: Re: AGI & Roth IRA question Date: 1/29/2002 6:19 PM
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How do you figure out what your adjusted gross income is?

AGI (or Adjusted Gross Income) can be found on the bottom of the first page of your 1040. It includes all of your taxable income, minus a few specific deductions. To help your specific question, 401k contributions are not taxable, so are excluded from your AGI.

For purposes of IRA contributions, there are a couple of modifications that must be made. So you will likely see references to Modified AGI (or MAGI - not to be confused with the "wise men" of the Christmas story <grin>). A couple of common modifications are the inclusion of tax-free interest (municipal bond interest) and the inclusion of non-taxable social security benefits. You also don't include any contributions to a deductible IRA.

If I were to put the $3000 in, and then he made more than $95,000, what would happen?

You could withdraw the excess contribution, along with any earnings. The earnings would be taxable and subject to the 10% premature withdrawl penalty. Or you could recharacterize the contributions to a traditional IRA. That might or might not be deductible, depending on the usual requirements for deductible IRA's.

We are getting married in the spring of 2003, that wouldn't raise his AGI limits on his 2002 contribution would it? (wishful thinking)

Yep - its wishful thinking. But it will change things for 2003.

--Peter
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