No. of Recommendations: 2
Oh so theoretically we can BOTH open our own respective accounts and contribute $4,000 to each one thus giving an advantage while we are under the max contribution mark.

Correct.

So if we reach that magical $150K income mark and can't contribute any longer, whats stopping us from withdrawing the whole amount tax free from the Roth, placing it in a regular bank account, then using that same money to then open a traditional IRA?

Ummm. The tax laws would be stopping you. Or at least your desire to avoid paying unnecessary taxes.

To take unrestricted tax-free withdrawals from a Roth IRA, you need to be over 59 1/2 AND the Roth IRA needs to be open for at least 5 years. If you don't meet those requirements, any earnings you withdraw will be taxed and subject to a 10% premature withdrawal penalty on top of that.

As has already been stated, once you have contributed to the Roth IRA, you can just leave the money there. Going over the limit for contributions some time in the future has no effect on the money already properly in the Roth.

So should you get over that limit, you could start making annual contributions to a traditional IRA instead.

--Peter
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