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Hi all.
I was hoping for some helpful guidance and advice for a couple of Roth IRA questions. Any feedback is much appreciated and I apologize, in advance, for the length of this posting.
My first question pertains to the MAGI for Roth IRA contributions. I know about the $107k - $122k single-filer limits (applicable to me) for full and partial contributions for 2011 but I was unsure how MAGI is calculated. I've recently graduated from grad school and I will begin work in November, where my annual salary will likely exceed the $122k limit. However, for 2011, I will only earn income from November 1 to December 31. Based on just these 2 months of work in 2011, may I contribute to a Roth IRA for 2011 or will my MAGI be calculated based on my annual salary?
Secondly, if I choose to convert a traditional IRA into a Roth IRA, at which rate will the conversion be taxed? Here is a little more info.: I fed into a 401(k) at a job before I went back to school in ‘08. I was making approx. $40k/yr. at that job and saved approx. $3k in the 401(k). Since I’ve been in school, I’ve had $0 income, apart from 2 months of work last summer. My tax bracket will be determined by the amount of income I earn from Nov. 1 to Dec. 31 of this year from my new job. Based this information, at what rate would a potential traditional IRA to Roth IRA conversion be taxed at—the rate of the income I earn from Nov. 1 to Dec. 31st, the rate at which I last fed my 401(k), or some other calculated rate? I ask because I expect my tax rate from Nov. onwards to be much higher than any point prior to when I went back to school.
Again, any guidance will be much appreciated. Thank you.
I was hoping for some helpful guidance and advice for a couple of Roth IRA questions. Any feedback is much appreciated and I apologize, in advance, for the length of this posting.
My first question pertains to the MAGI for Roth IRA contributions. I know about the $107k - $122k single-filer limits (applicable to me) for full and partial contributions for 2011 but I was unsure how MAGI is calculated. I've recently graduated from grad school and I will begin work in November, where my annual salary will likely exceed the $122k limit. However, for 2011, I will only earn income from November 1 to December 31. Based on just these 2 months of work in 2011, may I contribute to a Roth IRA for 2011 or will my MAGI be calculated based on my annual salary?
Secondly, if I choose to convert a traditional IRA into a Roth IRA, at which rate will the conversion be taxed? Here is a little more info.: I fed into a 401(k) at a job before I went back to school in ‘08. I was making approx. $40k/yr. at that job and saved approx. $3k in the 401(k). Since I’ve been in school, I’ve had $0 income, apart from 2 months of work last summer. My tax bracket will be determined by the amount of income I earn from Nov. 1 to Dec. 31 of this year from my new job. Based this information, at what rate would a potential traditional IRA to Roth IRA conversion be taxed at—the rate of the income I earn from Nov. 1 to Dec. 31st, the rate at which I last fed my 401(k), or some other calculated rate? I ask because I expect my tax rate from Nov. onwards to be much higher than any point prior to when I went back to school.
Again, any guidance will be much appreciated. Thank you.
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