Post by notsocreepylurker on Jan 31, 2013 8:40:20 GMT -5
I am starting to get my retirement plan into place (I am way behind). I am not sure if I can do an IRA or a Roth. Can anyone help me understand this? I've read some stuff on the IRS website and I got lost.
My 2012 W2 has the following: Gross Income: 62,581.07 PLUS GTL: 38.68 401K: 7617.59 (13% - went up to 14% this year) Other Cafe125: 587.63 Cafe125HSA: 999.96
Reported W2 wages: 53414.57
How do I figure out my AGI? Can I do an IRA or do I need to do a Roth because I have a 401k?
I am single, no student loans, no mortage, no kids, no deductions.
I apologize if these are easy simple things to figure out -- I am just lost.
A Roth is a type of IRA, and since you qualify for one (those filing single fully qualify for Roth IRA's as long as MAGI is under $110,000), I would recommend you open one.
You can put $5,000 in for 2012 any time before 4/15/13.
You can put another $5,500 in for 2013 any time before 4/15/14.
You will not get a deduction for these contributions, but the money will grow tax-free (you will not have to pay taxes on the capital gains or dividends) and when you withdraw the funds in retirement you will not have to pay income tax on the withdrawals.
When you withdraw from a 401K or a Traditional IRA, you have to pay income tax on the withdrawals.
Your AGI comes from your 1040 form. It's your income minus some dedications. However, since the largest number you gave is under $110k, you don't really need to worry about calculating it.
Eta: a Roth is a type of IRA. There are traditional (tax deductible and tax deferred) and Roth. The traditional works like a 401k and you can't take a tax dedication for it if your have a 401k.