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Let's say that the wife and I have a combined gross income of $165,000.00. Would the fact that we each contrbute $10,500.00 to our 401(k)'s bring our AGI down to $144,000.00 and permit us to each make $2,000.00 tax-free contributions or are we prevented from doing so because we're above the limit?

Yes. You'll find the explanation of the qualifying Modified Adjusted Gross Income (MAGI)in IRS Publication 590.

Note that your 401(k) contributions are deducted from your wages before your employer ever reports them in box 1 of your W-2. Thus, those contributions never make it on to your tax return and are thus not part of AGI. Nor are they an add-in for Roth MAGI, so you're safe.

Phil Marti
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