Deleted
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Post by Deleted on Feb 7, 2011 10:16:55 GMT -5
Ok, I got some information on this before but have some more questions. According to Turbo Tax, my MAGI is over the limit so I am not able to receive any tax benefit by putting money into a traditional IRA. Is there any other advantage to putting money in one rather than other savings vehicles?
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Post by Savoir Faire-Demogague in NJ on Feb 7, 2011 10:23:41 GMT -5
Alternatively, you can go the Roth IRA route.
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spartan7886
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Post by spartan7886 on Feb 7, 2011 10:29:29 GMT -5
The money will still grow tax free.
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Post by Deleted on Feb 7, 2011 10:31:50 GMT -5
So basically I don't have to report the interest I've earned each year like you do with a regular savings account?
Is there a tax advantage to a Roth IRA over a tradtional IRA?
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phil5185
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Post by phil5185 on Feb 7, 2011 10:34:12 GMT -5
The money will still grow tax free. Not tax free, only tax deferred. And then you get hammered with ordinary taxation, no capital gains advantages apply. I see no use for a non-deductible IRA (other than the temporary rule that allows a Roth conversion).
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Post by Deleted on Feb 7, 2011 10:37:22 GMT -5
tax deferred until I withdraw it, correct?
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DVM gone riding
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Post by DVM gone riding on Feb 7, 2011 10:46:49 GMT -5
Yes(deferred until you withdrawl) but if you are low enough that you can still contribute to a Roth that is a better deal-it is non-taxed (because you are already paying the taxes)
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Post by Deleted on Feb 7, 2011 10:51:56 GMT -5
My MAGI is $90K, I don't think I qualify for either Roth
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 7, 2011 11:55:21 GMT -5
Yes, you do. The limit for a single person is 105k. And even if you didn't, you could make a non-deductible traditional contribution and then convert it.
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Post by Deleted on Feb 7, 2011 12:15:13 GMT -5
I did my taxes with an 'imaginary' contribution and it said I didn't qualify because the MAGI has to be below $66K and mine was $90K.
from turbotax - income too high to make an ira contribution. to deduct a contribution, you can't have a MAGI of more than $66,000 while being covered by a retirement plan at work.
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 7, 2011 12:21:28 GMT -5
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Post by Deleted on Feb 7, 2011 12:31:33 GMT -5
I just did turbotax again with a roth IRA contribution and it says I don't qualify for an IRA deduction. I think I originally misstated my question. Is there any tax advantage to contributing to an IRA other than the fact that the interest earned isn't taxable until I take withdrawals?
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 7, 2011 12:39:28 GMT -5
SingleMom, you don't qualify to deduct traditional IRA contributions. You can make them, but you can't deduct them. Alternately, you could contribute to a Roth. With a Roth, you don't deduct contributions. Instead, your money grows tax-free and down the road your withdrawals are tax-free. Not tax-deferred, tax-free. That's a pretty big tax advantage.
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