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Author: Rebeq11 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: roth limitations Date: 12/29/2007 3:22 PM
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Please help! I can not find this information. I have looked on the IRS publication 590 with no success.

My husband and I made around $160,000 for the year 2007 and funded our ROth's fully. The phase out limit is $156,000. What is the reduced amount I can contribute?

I am wondering if there are any loopholes here, because I do not have any type of retirement plan at my job. Also I have paid some tax amount on my student loan. Does this change my MAGI?

Does anyone know the limit for next year?

Thanks,

Rebeq
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60580 of 75383
Subject: Re: roth limitations Date: 12/29/2007 3:56 PM
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I have looked on the IRS publication 590 with no success.

It's in Chapter 2.

My husband and I made around $160,000 for the year 2007 and funded our ROth's fully. The phase out limit is $156,000. What is the reduced amount I can contribute?

I am wondering if there are any loopholes here, because I do not have any type of retirement plan at my job. Also I have paid some tax amount on my student loan. Does this change my MAGI?


First, don't panic. If you have overcontributed, you have until October 2008 to fix it.

Your student loan interest probably isn't going to help much, if at all. If it is deductible it does reduce Roth MAGI, but the student loan interest deduction has its own MAGI phaseout range, which begins at $110,000 for joint filers.

The major piece of missing information is whether you husband made 401(k)-type contributions. Those reduce AGI from your gross pay, so they automatically reduce all MAGIs.

Does anyone know the limit for next year?

The phaseout begins at $159,000 MAGI.

http://www.irs.gov/newsroom/article/0,,id=174873,00.html

(It's way to the bottom.)

Phil

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Author: Rebeq11 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60608 of 75383
Subject: Re: roth limitations Date: 12/29/2007 10:10 PM
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Thanks Phil! Trying to understand this a bit better, to calculate my AGI and subsequent MAGI do I subtract my husband's 401-k contribution and our health benefit cost? How about TAP contributions and dependent care?

Thanks,

Rebeq

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60612 of 75383
Subject: Re: roth limitations Date: 12/29/2007 11:48 PM
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to calculate my AGI and subsequent MAGI do I subtract my husband's 401-k contribution and our health benefit cost? How about TAP contributions and dependent care?

Definitely yes on the 401(k). Probably health insurance and dependent care. I wouldn't know a TAP if I fell over one in the street.

The easiest thing to do is to wait until he gets his W-2. All this work is done in coming up with the Box 1 number, which is the amount that contributes to AGI. Second easiest would be to compare his final paystub for 2006 with his 2006 W-2. That will show you which deductions are pre-tax.

Phil

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Author: Rebeq11 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60619 of 75383
Subject: Re: roth limitations Date: 12/30/2007 3:42 PM
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I feel a lot better now because that allows me to be in the clear for maxed Roth savings. And it allows me to plan ahead for next year, maybe even increasing his 401k contribution. Thanks for your advice.

PS. TAP means tuition account program AKA 529 college savings plan for my children.

Rebeq

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60620 of 75383
Subject: Re: roth limitations Date: 12/30/2007 3:52 PM
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TAP means tuition account program AKA 529 college savings plan for my children.

Not deductible at the Federal level (Publication 970). May reduce state taxable income.

Phil

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