Can I contribute to a Roth IRA and 401k?
Вставка
- Опубліковано 19 тра 2024
- How to contribute to a Roth IRA and 401k in the same year.
0:00 Intro
0:24 401k Contribution Limits
1:38 Roth IRA Contribution Limits
2:00 Roth IRA Income Limits
2:55 Roth IRA MAGI
3:29 Roth IRA Income Limit Example
4:25 Backdoor Roth IRA conversion
5:15 Pro-Rata Rule
7:16 How to avoid the Pro-Rata Rule
8:39 401k Tax Tip
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0:00 Intro
0:24 401k Contribution Limits
1:38 Roth IRA Contribution Limits
2:00 Roth IRA Income Limits
2:55 Roth IRA MAGI
3:29 Roth IRA Income Limit Example
4:25 Backdoor Roth IRA conversion
5:15 Pro-Rata Rule
7:16 How to avoid the Pro-Rata Rule
8:39 401k Tax Tip
Right on time information as usual!
Hey Travis happy holidays
Just found your channel. Co-owner of a small business and I have no idea about retirement account options for SBOs. Looking forward to checking your videos out thank you!
Great video, Travis! Here's one not specifically covered at the IRS as far as I can find... What if someone with a basic solo-K has $32K in wages & they defer $20,500 + they get $8K in profit sharing. Assuming no other earned income, what's left for an IRA contribution? Does that $8K profit sharing use up eligible comp/earned income, reducing the IRA/spousal IRA potential?
Good question. No, the $8k profit sharing contribution is not used up by your w2 pay. It’s an employer deduction.
@@TravisSickle thanks- is that to say in 2023, if over age-50, where the 401k deferral limit is $30K: if they defer that max amount and they have, say, $44K of total salary/wages, then they can also potentially contribute $7K to Roth/IRA for *each* spouse for a total of $44K ($30K+$7K+$7K) and this could be OK even if they also had some employer contributions like 401k matching or even the full 25% profit share (which would be $11K)…?
@@JasonEscamilla right, same answer as above. Even if you put this example into practice you’ll find that you have less money due to tax withholdings but the irs doesn’t care how you pay your taxes. They just want to get paid. So even though you would technically not have the full amount because of tax withholdings, it’s still possible to make those contributions if you have the money to contribute.
It’s a great point and I may do a video on this. Even though most people don’t think this deeply about contributions. Except maybe you and I. 😂
Are the contributions limits per person or per couple? MFJ can contribution $6500 per person or total between them?
Per person
If I make a 150k a year single filling and I put 20k of my salary in to the company 401K that will make me eligible to put 6500 in a ROTH IRA?
As a pre-tax contribution it would lower your taxes below the limit.
The Modified AGI always gets me. 🤣 My wife and I earn $300K+, but only $265k is taxable. If we both max our 401(k), $52,500 and bring that to $212k, are we able to directly contribute to our Roth IRA or do we need to do the backdoor? We did the backdoor this year, but that was because we did Roth 401(k).
$204k go get the full amount. Do you have solo 401k or workplace plan?
@@TravisSickle , We both have a workplace plan that we both max out. For '23, I'll turn 50 so I'll contribute $30,000 and she'll contribute $22,500. MAGI is total - Traditional 401k contributions, correct?? As long as that is below $218k, I should be okay to directly contribute to our Roth IRA.
@@roburb73 I think your math is wrong. If it's a workplace plan then the max amount of employee deferral is 20,500 each. The employer match is not a deduction for you but it's also not subject to FICA taxes either. If it was a solo 401k then it would be a deduction to the business owner.
@@TravisSickle
These are my W2 & 1099 (military retirement) 23 numbers:
$121k - $30k (401k) = $91k
$93,934 - $22,500 (TSP) = $71,434
$55,750
All together that's $218,184. Are you saying my MAGI is $270,684?
@@TravisSickle I believe that solo 401k plans cannot have an employer match. The company can only contribute via a profit-sharing plan.
Can a person have more than one roth account or 2 traditional accounts?
Yes, but the limits are the same.
Very difficult to understand him. Too much tax jargon.
thanks for the feedback. If you have specific questions please post them.
pay the tax man now while you have the income or pay the tax man when your senile. good luck...
July 18, 2023