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No. of Recommendations: 0
Do you have an existing traditional IRA?

If you don't, then you can contribute to the TIRA and convert it immediately to a ROTH.
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No. of Recommendations: 0
Do you have an existing traditional IRA?

If you don't, then you can contribute to the TIRA and convert it immediately to a ROTH.
Print the post Back To Top
No. of Recommendations: 4
I have a 457 plan through work and I contribute the max ( about 25% of my salary). Does the amount I contribute come off my income? In other words...... If my salary were $210,000 total before taxes or any other deductions, can I take the money I contribute to my 457 off of the $210,000 in order to qualify for the Roth and get below the $198,000 threshold?

Assuming the 457 plan contributions are pre-tax (Traditional), then yes, the contribution amount would come off of your income. Please keep in mind that it's not just your salary that counts toward your MAGI (Modified Adjusted Gross Income), which is how you determine if you are eligible for a Roth. For instance, any dividends and interest you receive will also be added in, as will any income from your spouse (since you used $198k, I am assuming that you are MFJ). You can see how MAGI is calculated in IRS Pub 590-A https://www.irs.gov/pub/irs-pdf/p590a.pdf

As vkg indicated, if you don't have any other Traditional IRAs, if your MAGI does exceed the contribution limit, you can do a backdoor Roth by making a contribution to a non-deductible Traditional IRA and then converting that contribution. If you do have other Traditional IRAs, you will get hit with taxes on a pro-rata basis, so depending on how large the Traditional IRAs are, that might be a significant tax hit. To avoid that tax hit, if your 457 plan allows rollovers from an IRA (or you have access to a 401(k) or 403(b) plan that allows rollovers from an IRA), you can roll your Traditional IRAs into that plan before you make the contributions to the non-deductible IRA.

AJ
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