IRA vs. 401K


G

Gary Li

Can I contribute to IRA or roth IRA while joining my employer's 401k ?

Is $75000/85000 MAGI still applied to me ?

Thanks for any advice.

-Gary
 
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A

Arthur Kamlet

Can I contribute to IRA or roth IRA while joining my employer's 401k ?

Is $75000/85000 MAGI still applied to me ?

The AGI limits might reduce the amount you can deduct from a
traditional IRA contribution, but you can definitely make a
traditional IRA contribution, even if you cannot deduct it.



You might even be able to contribute instead to a Roth IRA. AGI
limited.
 
G

Gary Li

Do you mean if my MAGI is larger than $85000 (married join) I still can
contribute up to the IRA limit to my traditional IRA, and enjoy the tax free
gains there ?
But I have to use after tax money ?

What will happen when I withdraw the money ?
No tax for my contribution portion, only the gains will be charged tax ? How
and who will track the different portions ?

Also, is there any MAGI restriction about my roth IRA contribution amount ?

Thanks

-Gary
 
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A

Arthur Kamlet

Do you mean if my MAGI is larger than $85000 (married join) I still can
contribute up to the IRA limit to my traditional IRA, and enjoy the tax free
gains there ?
But I have to use after tax money ?





You've got it.

What will happen when I withdraw the money ?
No tax for my contribution portion, only the gains will be charged tax ? How
and who will track the different portions ?

You must file form 8606 every time you make a nondeductible
contribution.


That form helps you calculate the taxable portion of any
distribution.


Also, is there any MAGI restriction about my roth IRA contribution amount ?



Yes, see IRS Pub 590.



Thanks

-Gary
 

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