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Author: RoadScholar5 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76420  
Subject: Roth Question Date: 1/24/2011 12:38 PM
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I am recently divorced and for years, was unable to contribute to a Roth due to being above the income ceiling.

Now that I am single, I am revisiting this income ceiling.

I see that for 2010, it is $105K/year for a single person.

I am looking at my 2010 W-2 statement from my employer. I am above $105K for 2010...but well below $105 after contributions to my 401K.

Which figure do I use? I realize this may be obvious to most, but I am having a brain lapse at the moment.

RS
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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68312 of 76420
Subject: Re: Roth Question Date: 1/24/2011 1:16 PM
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I am looking at my 2010 W-2 statement from my employer. I am above $105K for 2010...but well below $105 after contributions to my 401K.

I believe - but am not sure - that ROTH eligibility depends on your adjusted gross income, not your W-2 statement income.

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68313 of 76420
Subject: Re: Roth Question Date: 1/24/2011 1:26 PM
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Roth eligibility is based on adjusted gross income.

One thing you might want to think about, will you make enough to be in-eligible next year and years there after. If you're only able to make one or two years contributions, it might not be worth the hassle.

JLC

http://www.money-zine.com/Financial-Planning/Retirement/Roth...

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68314 of 76420
Subject: Re: Roth Question Date: 1/24/2011 1:51 PM
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One thing you might want to think about, will you make enough to be in-eligible next year and years there after. If you're only able to make one or two years contributions, it might not be worth the hassle.

Although that might be true, you can't know until after the fact if you are not able to contribute except for a few years.

I fall into this bucket. In order for DH and I to qualify for a Roth IRA, I have to be unemployed. That's happened 3 times so far with last year being the most recent. I have taken advantage of this each time and have maxed our our Roth IRA contributions. That's 3 times more than I thought we would qualify for, but as I have no way to know ahead of time how many years I may be able to contribute, I'd rather take the chance that there will be more years and do the contribution to the Roth.

Given the OP's current status, I would bet that she will be able to contribute for a few years, so I would definitely be contributing this year and every year where I were eligible.

Something I do to help with this is that I do not make my Roth contribution until after I have done my taxes so that I know that we are, in fact, eligible to make the contribution. That's easier than making it earlier in the year because I assume that will be eligible, and then finding out that this is not true and having to recharacterize contributions or pull them out.

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Author: codger41 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68315 of 76420
Subject: Re: Roth Question Date: 1/24/2011 2:09 PM
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Isn't there a hole in the tax laws occasioned by removal of the income limits for making an IRA/Roth conversion? The strategy is for taxpayers to open nondeductible IRAs, which have no contributory income limits, and immediately convert the nondeductible IRA to a Roth.

Could this work for you if you find that your income is above the Roth contribution limit?

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 68316 of 76420
Subject: Re: Roth Question Date: 1/24/2011 3:22 PM
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Isn't there a hole in the tax laws occasioned by removal of the income limits for making an IRA/Roth conversion? The strategy is for taxpayers to open nondeductible IRAs, which have no contributory income limits, and immediately convert the nondeductible IRA to a Roth.

Could this work for you if you find that your income is above the Roth contribution limit?


This works fine if you don't have any deductible or rollover IRAs.

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