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>> My specific problem is that my gross income may be over 95K this year (depending on bonuses and raises). However, I am making a 10K contribution to my 401K at work. Does this 10K get subracted from my Roth IRA income limit? <<

Yes. Your 401K contributions reduce your W-2 wages. If you grossed $100K and you contribute $14,000 (maximum for 2005) to a 401K plan, your modified AGI for this purpose (absent other considerations) is $86,000.

It's interesting, really, that when you're near the phaseout, your ability to fund a Roth depends on how much you can fund a 401K plan; in that case, the more you put into a 401K, the more you can probably put into a Roth as well.

>> If this is going to be a problem, I already made my 2005 Roth contriubtion of 4K. What happens - does my bank make me put the 4K into a traditional IRA? <<

It's not a problem for you if 401K contributions will keep you below the $95,000 level, but if it were a problem, yes, you would have to recharacterize your Roth into a traditional (and probably non-deductible) IRA. Personally, with dividends and long-term capital gains at a lower tax rate, I'd pull the contributions out (which you can always do without tax consequence) and invest in a taxable account -- unless you thought your income would be low enough to convert the traditional non-deductible IRA to a Roth at some point in the future.

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