IRA contribution limitations...Let me get this straight!

[rxtrom]

I over heard someone at work talking about retirement contributions outside my office and I want to confirm what my understanding is....I wasn't sure enough to step in and correct them. Plus that is just not me...


For 2013:

401k contribution MAX is $17500 not including employer match.

AS WELL AS the ability to contribute a MAX of $5500 to a TIRA or ROTH IRA

After exhausting the above IRA options then it is a matter of long term savings in a mutual fund company or broker etc....

It is also my understanding that if a person is married filing jointly and their MAGI is over 115K then none of the 401k contributions are tax deductible. At that point one should only contribute to the 401k until the matching and then max a ROTH THEN after that throw it back at the 401k again.

Sorry if that was confusing....

[BuckyBadger]

Not quite right.

After some adjusted income level (the exact one I'm not sure of, but your $115k might be right) you can no longer contribute to a Roth IRA and traditional IRA contributions are no longer deductible.

401k contributions (unless made specifically after tax or as a Roth 401k) are always BEFORE tax.

[rxtrom]

Not quite right.

After some adjusted income level (the exact one I'm not sure of, but your $115k might be right) you can no longer contribute to a Roth IRA and traditional IRA contributions are no longer deductible.

401k contributions (unless made specifically after tax or as a Roth 401k) are always BEFORE tax.

Ah right. Ok the TIRA deduction limitation is @ 115k and 401k contributions are always pre tax so that is a mute point.

Roth IRAs are not available for Married filing jointly over 179k btw.

[jpg7n16]

For 2013:

401k contribution MAX is $17500 not including employer match.

Correct. 401k elective deferral limit is $17,500 (under age 50). Meaning you can do $17,500.

AS WELL AS the ability to contribute a MAX of $5500 to a TIRA or ROTH IRA

Correct. The IRA contribution limit is $5,500 for 2013 (under age 50). This is separate from, and in addition to, any workplace plan.

Keep in mind that it is $5,500 total across all IRAs (Roth and Traditional combined). And everyone can do up to $5,500 in some form of an IRA. There are income limits of who can contribute to a Roth, and there may be income limits for who can deduct the Traditional IRA contribution on their taxes.

See these links from the IRS to help.

Is your Traditional IRA tax deductible? IRA Deduction Limits

Can you contribute to a Roth? Publication 590 (2012), Individual Retirement Arrangements (IRAs)


If you make too much to do a Roth, and you make too much to deduct your contribution, you can still make an IRA contribution, you just can't deduct it on your taxes.

After exhausting the above IRA options then it is a matter of long term savings in a mutual fund company or broker etc....

Correct. Everyone can contribute an unlimited amount to a taxable brokerage account.

It is also my understanding that if a person is married filing jointly and their MAGI is over 115K then none of the 401k contributions are tax deductible.

No. 401k contributions are always deductible regardless of income. (unless they are Roth 401k)

At that point one should only contribute to the 401k until the matching and then max a ROTH THEN after that throw it back at the 401k again.

That is actually my preferred strategy.

[scfr]

Here is a good Fact Sheet on IRAs: https://personal.vanguard.com/us/wha.../ira/factsheet

Your employer may set limits on how much you can contribute to a 401(k), stated as a percentage of your income.