For financial reasons we’ve filed separately for the first time ever, and will likely do so until 2025. I was informed that I can no longer contribute to or maintain a Roth IRA. What’s the most sensible conversion for this account? My other retirement accounts are a state employee retirement fund (no longer contributing as of 2010, moved out of state) and an active employer-based 401k.
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Are you maxed on your 401k contributions?
For financial reasons we’ve filed separately for the first time ever, and will likely do so until 2025. I was informed that I can no longer contribute to or maintain a Roth IRA. What’s the most sensible conversion for this account? My other retirement accounts are a state employee retirement fund (no longer contributing as of 2010, moved out of state) and an active employer-based 401k.
who told you that you couldn’t maintain the Roth? and why did they tell you that?
I was informed that I can no longer contribute to
That is correct.
or maintain a Roth IRA.
Who told you that? Please never talk to that person about financial matters ever again, also, inform them that they are grossly incompetent.
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You, sir, are my new financial advisor.
Pretty sure you do not have to convert the account, and why would you given the tax benefits? Just switch to a traditional IRA or add more to your 401k if it is not maxed out.
drn92
So you’re saying I can keep it, but can no longer contribute until I’m filing married-jointly again? That would be ideal. No double taxation for rolling it into a 401k.
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As others have said, fire whoever is giving you bad advice on retirement accounts. Do you have a traditional IRA by any chance? If not, then research backdoor Roth IRA contributions. If you do have a traditional IRA, it can complicate matters.
Make a non-deductible contribution to a traditional IRA, then convert it to a Roth. If you go this route, keep the cash in the traditional IRA account long enough to make at least a penny or two of interest, then transfer the $5.5K (assuming you max the contribution), leaving the penny or two in the traditional IRA account. Since there are no gains on the Traditional IRA, and it wasn’t deducted in the first place, there is no tax liability. Secondly, for leaving the small balance in the traditional IRA, it decreases the likelihood that your brokerage company will close the account, saving you the hassle of opening another one next year! In other words, wash, rinse, repeat.
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So you’re saying I can keep it, but can no longer contribute until I’m filing married-jointly again? That would be ideal. No double taxation for rolling it into a 401k.
You can keep it without contributing, yes. There is no reason to combine it with a tax-deferred account as you would lose the tax-free status of the money in the Roth. Your employer may have a Roth 401k you can contribute to but Roth v tax deferred come down to tax rates.
I was told by my HR Block tax preparer, but misremembered what she said (per Mrs sphere); she said I can no longer contribute, and need to withdrawal all contributions made in 2013, but said nothing about needing to roll it over.
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I was told by my HR Block tax preparer, but misremembered what she said (per Mrs sphere); she said I can no longer contribute, and need to withdrawal all contributions made in 2013, but said nothing about needing to roll it over.
That is correct, you can no longer contribute directly, but that doesn’t mean you can’t exploit the ill-intentioned loopholes that our esteemed Congress generated via the law of unintended consequences.
Helpful Link re: loophole
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I was told by my HR Block tax preparer, but misremembered what she said (per Mrs sphere); she said I can no longer contribute, and need to withdrawal all contributions made in 2013, but said nothing about needing to roll it over.
That is correct, you can no longer contribute directly, but that doesn’t mean you can’t exploit the ill-intentioned loopholes that our esteemed Congress generated via the law of unintended consequences.
Helpful Link re: loophole
True, but it may not make sense from a tax bracket POV.
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I’m also curious as to why you would fill separate if married. I would recommend getting a second opinion on that one. Feels like someone is asking you to do it because you are making enough income to start phasing out of deductions but could otherwise somehow keep them if you filed separate?
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Buy a f’in Corvettte. Are you kidding?
For financial reasons we’ve filed separately for the first time ever, and will likely do so until 2025. I was informed that I can no longer contribute to or maintain a Roth IRA. What’s the most sensible conversion for this account? My other retirement accounts are a state employee retirement fund (no longer contributing as of 2010, moved out of state) and an active employer-based 401k.
When you said you couldn’t keep your “ROTH” I thought you meant something life important, like a Challenge Roth entry!
Filing jointly would raise my student loan repayment from $400 to $1,700 per month. We ran the numbers both ways and we’ll save roughly $8k this year filing separately.
Loan will be forgiven after 2025, so it makes sense to keep the payments as low as possible until then, so long as we save more per year on repayment than we forfeit in tax penalty.
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I was told by my HR Block tax preparer, but misremembered what she said (per Mrs sphere); she said I can no longer contribute, and need to withdrawal all contributions made in 2013, but said nothing about needing to roll it over.
That is correct, you can no longer contribute directly, but that doesn’t mean you can’t exploit the ill-intentioned loopholes that our esteemed Congress generated via the law of unintended consequences.
Helpful Link re: loophole
True, but it may not make sense from a tax bracket POV.
Take advantage of all the tax-deferred space you have. The income limit for “married filing separate” is $10k per individual for both Roth and TIRA, the backdoor is the only option.
I was told by my HR Block tax preparer, .
HR Block??? Damn you pay a high school grad to prepare your taxes. They don’t have turbotax where you live?
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I typically use HR’s online program, but it didn’t allow me to calculate both ways. I figured the added cost was worth it given that I had already paid for the service, and that once we figured out how we should file during repayment I’d go back to doing it myself next year.