Re: Roth IRA maximum income?
Pemolis,
Beware asking tax questions on a message board
Anyway, my ignorant read is:
1) Could I put more into my TSP to drop my annual salary from 115,323 to 109,999 so that I get under this mythical Roth adjustment cap? Yes. I looked at my IRS 1040 form and only 'Taxable Income' is placed in Line 7. Your TSP and FEHB benefits come out as part of the AGI. I'm actually surprised at this.
2) If the Roth does show up in the TSP this year, would it still factor in this salary cap (I am assuming yes)? A Roth TSP (actually a Roth 401(k)) will not have a $5,000 limit - it will be the 401(k) limit which is $17,000 this year. But, yes, the income limits will be in effect. Be carefull, these accounts have differing limits.
3) Can I have both a Roth and a IRA open (5000 into roth, 5000 into ira yearly? or am I missing something). You cannot invest in a Traditional IRA - unless you want to make non-deductable contributions because you have a 401(k) - that is, TSP. The total investement you can make in your 401(k) options is limited to $17,000 combined. You may contribute $17,000 to TSP and the max to a Roth IRA (I think $5,000 this year). I have no idea if you can continue to contribute to a Roth IRA when the Roth 401(k) becomes available. See the Traditional 401(k) and Traditional IRA discussion.
4) On taxes, when I put in my IRA information (Lets say both my Roth and IRA contributions were 5000 this year, and each made $300), how much in taxes would I have to pay out of pocket to the IRS (have to factor it so I can save for it. None. You don't pay taxes on the growth of any retirement account. However, you cannot contribute to a Traditional IRA while contributing to a Traditional 401(k).
5) Would I receive notice (like a Roth W2) from the place I have my Roth in each year? You will receive a statement, but nothing like a W2. It will look more like the annual statements you get from TSP. As long as you keep your assets inside the retirement account you really don't have much (any) accounting to do. Your W2 from work will have all the computations in it. And, if you elect (can) invest in a Roth IRA than nobody cares how much you contribute (up to the limit), and nobody cares how much it increases or decreases.
You have lots of good questions. It will be interesting to see how HRO (or Civilian Pay) offices deal with the mix.. Personally, a bit of advice from a tax expert is probably in order for you. Ever deal with the IRS before. I haven't and won't (hopefully) because when I come to the point of making the financial moves you are I will talk to someone who really knows their stuff. I'd hate to battle the IRS and spend time in the Grey Bar Motel...
Lookin' up at the 'G Fund'!!!
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