My wife and I gross more than $190,000 in income. But after 401(k) contributions and other adjustments, I think we are below the max of $160,000 to contribute to a Roth IRA. How do I know for sure? Is there a line on my 1040 that tells me?The key figure for Roth IRA eligibility is your "modified adjusted gross income," which is your adjusted gross income -- the last line on the first page of your 1040 -- with a few adjustments. Add back to your income any deduction you had taken for IRA contributions, student loan interest, bond interest used for college costs, employer-provided adoption benefits and a few others (see IRS Publication 590 Individual Retirement Arrangements for a full list and worksheet). Subtract any income that came from converting a traditional IRA to a Roth.
And the AGI itself doesn't include money that had already been deducted from your paychecks, such as pretax money you contributed to a 401(k) or flexible-spending account. In your case, it seems to make the difference. Married couples filing jointly can contribute up to $5,000 each to a Roth IRA in 2008 (or $6,000 if 50 or older) as long as their modified adjusted gross income is less than $159,000. You'll be able to make a partial contribution if your income is less than $169,000 (Publication 590 includes a worksheet to help with these calculations, too).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
-
The Downside of Delaying RMDsThanks to the SECURE 2.0 Act, the age for required minimum distributions is going up. However, don't automatically assume you'll benefit from this change.
-
5 Tax Deadlines for October 17tax deadline Many taxpayers know that October 17 is the due date for filing an extended tax return, but there are other tax deadlines on this date.
-
Text Scams: How to Avoid (and Report) ThemSpam texts are surpassing robocalls as the preferred choice of scammers. Here’s how to avoid being a victim.
-
Two Smart Ways to Help Your Kids Buy A HouseBe aware of the IRS rules when lending or giving your kids money to help them achieve their dream
-
PODCAST: Defusing the Retirement “Tax Bomb” with David McClellanTax Breaks If you’ve dutifully socked away money in a 401(k) or IRA for years, you could be in for an unpleasant shock when it comes time to take money out of those accounts. Also, the IRS is sending out a surprise round of checks.
-
Is Your Retirement Portfolio a Tax Bomb?retirement planning A warning to high earners and super savers: That massive 401(k) or traditional IRA that you worked so hard to build may become a big problem in retirement, resulting in huge tax bills and Medicare surcharges. Here’s what you need to know, and what you can do about it.
-
IRAs vs. 401(k)s: Exceptions to 10% Penalty for Withdrawals Under Age 59½ DifferIRAs Before pulling money out of retirement accounts early, check the rules. The exceptions to penalties can differ depending on which type of account you’ve got.
-
Don’t Name Your Estate as Your IRA BeneficiaryIRAs It may sound like it makes sense, and it might be easier than picking a person (or two) to name, however there are some serious downsides to naming your estate as the beneficiary for your IRA.
