Another actual money question: Traditional IRA

[ohgillian]

I'm embarassed that I don't know this. Whatev.

How -- logistically -- do I contribute to my traditional IRA? I have only ever funded it with rollovers. I know that traditional IRAs are pre-tax, and the money I want to contribute is sitting in my checking account, post-tax. Does that matter? How do I make a pre-tax contribution to it?

I have the idea that I can just transfer the money into the IRA, and that somehow when I file my taxes, this will be resolved. Yes?

Thanks!

[Deleted]

Oct 16, 2012 9:57:33 GMT -5 ohgillian said:

I'm embarassed that I don't know this. Whatev.

How -- logistically -- do I contribute to my traditional IRA? I have only ever funded it with rollovers. I know that traditional IRAs are pre-tax, and the money I want to contribute is sitting in my checking account, post-tax. Does that matter? How do I make a pre-tax contribution to it?

I have the idea that I can just transfer the money into the IRA, and that somehow when I file my taxes, this will be resolved. Yes?

Thanks!

Yes. Do you do your taxes?

[ohgillian]

Oct 16, 2012 10:00:03 GMT -5 d0ri said:

Oct 16, 2012 9:57:33 GMT -5 ohgillian said:

I'm embarassed that I don't know this. Whatev.

How -- logistically -- do I contribute to my traditional IRA? I have only ever funded it with rollovers. I know that traditional IRAs are pre-tax, and the money I want to contribute is sitting in my checking account, post-tax. Does that matter? How do I make a pre-tax contribution to it?

I have the idea that I can just transfer the money into the IRA, and that somehow when I file my taxes, this will be resolved. Yes?

Thanks!

Yes. Do you do your taxes?

Yup -- well, DH started doing them about 2 years ago. (Confession: I miss doing them.) I've just never paid any attention to the boxes for this b/c my contributions have always either been 1) Roth, or 2) taken out of my paycheck pre-tax.

Thank you!

[SJ]

Well traditional IRA contributions are only pre-tax (meaning deductible) under certain circumstances if you are not eligible for an employer plan. The deductibility phases out as your income rises. In many cases, they are post- tax.

If you do not have access to an employer plan, you can deduct Traditional IRA contributions regardless of income level. If you DO have access to a plan, the ability to deduct contributions phases out between $90K-$110K for those filing MFJ.

Anyway, in order to contribute you just transfer $5,000 into the IRA. Nothing special there.

[orval]

Butting in with a question - Sarajoy - if I am self employed (Sub S Corp) and do not have a company plan, but my husband does have a company 401K - do we still have no income limit on a traditional IRA if it is in my name? THanks

[thatgirl2478]

Oct 16, 2012 10:05:11 GMT -5 SJ said:

Well traditional IRA contributions are only pre-tax (meaning deductible) under certain circumstances if you are not eligible for an employer plan. The deductibility phases out as your income rises. In many cases, they are post- tax.

If you do not have access to an employer plan, you can deduct Traditional IRA contributions regardless of income level. If you DO have access to a plan, the ability to deduct contributions phases out between $90K-$110K for those filing MFJ.

Anyway, in order to contribute you just transfer $5,000 into the IRA. Nothing special there.

This.

It gets even more complicated if you have access to a 401k and your spouse doesn't (or vise versa).

[ohgillian]

Oct 16, 2012 10:05:11 GMT -5 SJ said:

Well traditional IRA contributions are only pre-tax (meaning deductible) under certain circumstances if you are not eligible for an employer plan. The deductibility phases out as your income rises. In many cases, they are post- tax.

If you do not have access to an employer plan, you can deduct Traditional IRA contributions regardless of income level. If you DO have access to a plan, the ability to deduct contributions phases out between $90K-$110K for those filing MFJ.

Anyway, in order to contribute you just transfer $5,000 into the IRA. Nothing special there.

Hmm. Thanks for the additional info. We are above $110 MFJ.

I do have access to an employer 401k with both Roth and Traditional options. (I contribute to the Roth option.) In this particular case, I messed up when changing my contribution level online, and my employer thus didn't direct any of my paycheck to the 401k for 2 months, which was totally my fault. So that money just came into my checking account.

I want to somehow get it into a retirement account, but both DH and I have already put $5k into our Roth IRAs for the year. So I have this money and am trying to figure out how to get it into a retirement account.

[thatgirl2478]

You can put the money in, but it wouldn't be tax deductible. At that point it becomes just like any other taxable investment.

[Deleted]

Oct 16, 2012 10:13:15 GMT -5 ohgillian said:

Hmm. Thanks for the additional info. We are above $110 MFJ.

I do have access to an employer 401k with both Roth and Traditional options. (I contribute to the Roth option.) In this particular case, I messed up when changing my contribution level online, and my employer thus didn't direct any of my paycheck to the 401k for 2 months, which was totally my fault. So that money just came into my checking account.

I want to somehow get it into a retirement account, but both DH and I have already put $5k into our Roth IRAs for the year. So I have this money and am trying to figure out how to get it into a retirement account.

You can't contribute to traditional IRA (deductible or non-deductible) if you already contributed to Roth IRA.

On the 401k, can't you increase your contribution for the rest of the year to make up for those 2 mos they did not do the deduction?

[ohgillian]

Oct 16, 2012 10:24:07 GMT -5 d0ri said:

Oct 16, 2012 10:13:15 GMT -5 ohgillian said:

Hmm. Thanks for the additional info. We are above $110 MFJ.

I do have access to an employer 401k with both Roth and Traditional options. (I contribute to the Roth option.) In this particular case, I messed up when changing my contribution level online, and my employer thus didn't direct any of my paycheck to the 401k for 2 months, which was totally my fault. So that money just came into my checking account.

I want to somehow get it into a retirement account, but both DH and I have already put $5k into our Roth IRAs for the year. So I have this money and am trying to figure out how to get it into a retirement account.

You can't contribute to traditional IRA (deductible or non-deductible) if you already contributed to Roth IRA.

On the 401k, can't you increase your contribution for the rest of the year to make up for those 2 mos they did not do the deduction?

Well -- good to know! I think that your second point is probably the most reasonable solution at this point. Because for some reason it REALLY bothers me that I missed those 2 months. I feel almost religious about contributing 15% of gross, and otherwise I will not meet that goal for the year.

I will check about upping my payroll deduction for Nov and Dec (already missed the Oct cutoff).

And...thanks everyone for keeping me from inadvertently being illegal.

[SJ]

You cannot contribute $5K to a Traditional IRA and another $5K to a Roth IRA in the same year.

I would just talk to HR and have them take out more in the remaining few months to even out for the year and make sure you are putting away the total that you want for the year. I have done this before and it is a relatively simple solution.

[SJ]

Oct 16, 2012 10:09:33 GMT -5 orval said:

Butting in with a question - Sarajoy - if I am self employed (Sub S Corp) and do not have a company plan, but my husband does have a company 401K - do we still have no income limit on a traditional IRA if it is in my name? THanks

If you are self-employed via a sub S, I would highly recommend that you look into SEP plans. You should be able to sock away quite a bit this way, and contributions are deductible. Do you have an accountant you can run this by?

To clarify, there is no income limit on contributing to a Traditional IRA. You can always do that. The question is just to what extent your contributions will be deductible- and I can't speak confidently on that matter without reviewing your whole situation.

As to the spousal information, here is some clarification, because the short answer is "it depends"

www.bancorpsouthonline.com/home/personal/savings/individual

Look under the heading "Are IRA Contributions Tax Deductible?"