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Author: rschoemer Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121482  
Subject: Modified AGI Date: 2/27/2003 10:37 PM
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Good Day Fools!

I am in the process of starting IRA's for my wife and I. I currently have a Traditional IRA set-up, but am over the income limit to take a deduction or convert it to a ROTH.

Our combined AGI is veeeery close to the $150,000 limit for full contributions to a ROTH, but in reading the instructions on page 2 of IRS Form 8606 under "Contributions" it says "Use the Maximum Roth IRA Contribution Worksheet below.... If you are married filing jointly complete worksheet seperately for you and your spouse."

Am I to compare our individual incomes against the $160,000 figure when calculating IRA contributions for each of us (i.e. a potential combined income limit of $320,000)?

If so, does the same Modified AGI rule apply for Traditional IRAs? Is it possible that my wife qualifies for a Traditional IRA deduction even if I don't? Her income only accounts for about $37,000 of our combined AGI.

I have a non-contributory profit sharing plan at work, and she participates in a 401k at hers. I just want to make sure I open the best choice IRA for each of us.

Thanks in advance for any assistance,
Russ Schoemer
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 64150 of 121482
Subject: Re: Modified AGI Date: 2/28/2003 4:58 AM
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Our combined AGI is veeeery close to the $150,000 limit for full contributions to a ROTH, but in reading the instructions on page 2 of IRS Form 8606 under "Contributions" it says "Use the Maximum Roth IRA Contribution Worksheet below.... If you are married filing jointly complete worksheet seperately for you and your spouse."

Am I to compare our individual incomes against the $160,000 figure when calculating IRA contributions for each of us (i.e. a potential combined income limit of $320,000)?


I can see how you got there, but it's the wrong station. Notice that the only thing that's individual about that worksheet is the $3,000 limit. References to AGI are joint AGI, and no where is it concerned with one spouse's portion of AGI. IOW, the MAGI limit is $160,000.

<snip>

I have a non-contributory profit sharing plan at work, and she participates in a 401k at hers. I just want to make sure I open the best choice IRA for each of us.

Since you are both covered by plans, both of you are subject to the same AGI phaseout of deductibility.

Phil Marti
VITA Volunteer

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Author: rschoemer Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 64153 of 121482
Subject: Re: Modified AGI Date: 2/28/2003 8:39 AM
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Phil,

Thanks for your help. I knew that the double limits didn't seem to make sense, but I also couldn't figure out what good filling out the worksheet twice using the same numbers was going to do :- )

Figured I might as well check the wisdom of the group before making a bad choice in IRAs. I did just that a couple of years ago when I let TURBO-TAX convince me that since my profit sharing program was non-contributory, I was eleigable for the IRA deduction :-(

THanks again,
Russ Schoemer

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