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I think I ask this every year, and the answer's the same. THe question just keep getting a little different.

I think I'll be ineligible for a Roth IRA. I can't be sure, PWC did my 2010 taxes from an overseas assignment, and there are some tax events in 2011 from that assignment. But let's assume I'm over the limit.

I have a 401k, a traditional IRA, and a Roth IRA. My wife has a couple of small IRAs and a Roth IRA.

Would the simplest thing to do it just contribute the maximum amount to the traditional IRA's even if they're not tax deductible?

I was thinking if I put $6k into a tradition IRA and converted it the same day to a Roth IRA, that would be a worthy goal, but I'm not sure the effort is worthwhile.

And since I probably won't do my taxes for a few more months, but there's no reason to wait to contribute. I can do that today, do my taxes in April showing the non-deductible contribution.
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I have a 401k, a traditional IRA, and a Roth IRA. My wife has a couple of small IRAs and a Roth IRA.

Would the simplest thing to do it just contribute the maximum amount to the traditional IRA's even if they're not tax deductible?


Definitiely simple.

I was thinking if I put $6k into a tradition IRA and converted it the same day to a Roth IRA, that would be a worthy goal, but I'm not sure the effort is worthwhile.

You mention that you have a traditional IRA, but you don't say anything about its pre/post tax composition. Remember that you cannot designate a particular contribution in a conversion. If there's any after-tax money in any traditional IRA account your conversion will consist of a mix of pre/post tax funds, with the former creating a tax liability in the year of conversion.

And since I probably won't do my taxes for a few more months, but there's no reason to wait to contribute. I can do that today, do my taxes in April showing the non-deductible contribution.

Definitely no need to wait. If it turns out that you can make a Roth contribution you can recharacterize that part of the traditional contribution and the earnings on it to Roth any time before 10/15/2012.

Phil
Rule Your Retirement Home Fool
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You mention that you have a traditional IRA, but you don't say anything about its pre/post tax composition

It's mostly pre-tax, but there is some after-tax included now. Definitely not clear-cut, and at the moment don't know how to determine the split. Hindsight would have been to put that in a separate after-tax IRA.

I'll go ahead and contribute the full amount now to my traditional IRAs, which will probably be non-deductible.
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It's mostly pre-tax, but there is some after-tax included now. Definitely not clear-cut, and at the moment don't know how to determine the split. Hindsight would have been to put that in a separate after-tax IRA.

That wouldn't have made a difference. You must combine all traditional IRA accounts before calculating how much of a distribution/conversion consists of after-tax basis.

Ira
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You mention that you have a traditional IRA, but you don't say anything about its pre/post tax composition

It's mostly pre-tax, but there is some after-tax included now. Definitely not clear-cut, and at the moment don't know how to determine the split. Hindsight would have been to put that in a separate after-tax IRA.


That wouldn't have helped, as you'll find when you examine Part I of Form 8606. It's really pretty simple if you've kept good records and properly reported your after-tax contributions.

Phil
Rule Your Retirement Home Fool
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I have new information, so I'm making sure I'm contributing effectively.

a) My modified AGI looks to be less than $169k.
b) I am covered by a 401k at work, I've maxed out.
c) My wife worked only a small part time job, less than $1k, and is not covered by a retirement plan.

So, I think I should do the following -
a) Contribute $6k to my Roth IRA, and
b) Contribute $6k to my wife's Traditional IRA, which is tax deductible.

Look right?
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a) My modified AGI looks to be less than $169k.
b) I am covered by a 401k at work, I've maxed out.
c) My wife worked only a small part time job, less than $1k, and is not covered by a retirement plan.

So, I think I should do the following -
a) Contribute $6k to my Roth IRA, and
b) Contribute $6k to my wife's Traditional IRA, which is tax deductible.

Look right?


Yup.

Phil
Rule Your Retirement Home Fool
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