Message Font: Serif | Sans-Serif
No. of Recommendations: 0

We have our IRAs (the traditional variety) with Vanguard. I was quite surprised to read these words recently on the Vanguard web site:

You may also make a partially deductible contribution to your traditional IRA depending upon your MAGI [Modified Adjusted Gross Income]....If you are married filing separately, the phase-out range is $0 - $10,000.

And again:

When you are filing your income taxes Married Filing Separately there is a significant change in the maximum income limits for Roth IRAs and in the deductibility limits for Traditional IRAs.

For Traditional IRAs the phase out range for deductible contributions [is] $0 - $10,000 if participating or not participating in a retirement plan through your work.

This seems to say that whether participating in a 401(k) or not (I do), the phaseout range for deductibility ends at $10,000 per year of Modified Gross Income.

Am I reading this correctly? Who (other than a college student with a part-time job) earns less than $10,000 per year? And how could he (or she) afford to contribute to an IRA at that income level, anyway?

It gets even stranger:

For Roth IRAs the income limits for making a contribution phases out between $0 - $10,000.

Surely I am misreading this. Can you provide me with any further information, please?


Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.