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Most of us will not become wealthy in this profession. What else do you do for income?


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Question about Roth IRA:

 

I make 100K and my GF makes 125K. We are not married yet, therefore we can each open a ROTH IRA account, contributing 5.5K annually ('till we're married).

 

now once we are married,

 

if we file jointly our combined gross income is going to be 225K which is higher than the IRS MAGI limit of 184k - 194K

if we file separately, the IRS MAGI limit is 0-10K

 

does that mean we won't be able to have a ROTH account once married? And what shall we do with the accounts we opened prior to being married?

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Question about Roth IRA:

 

I make 100K and my GF makes 125K. We are not married yet, therefore we can each open a ROTH IRA account, contributing 5.5K annually ('till we're married).

 

now once we are married,

 

if we file jointly our combined gross income is going to be 225K which is higher than the IRS MAGI limit of 184k - 194K

if we file separately, the IRS MAGI limit is 0-10K

 

does that mean we won't be able to have a ROTH account once married? And what shall we do with the accounts we opened prior to being married?

It is my understanding that there is a loophole where one can contribute 5.5k to a traditional IRA, and then transferer the 5.5k to the Roth.  However, this negates the ability to deduct the 5.5k that was deposited into the traditional IRA. 

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Question about Roth IRA:

 

I make 100K and my GF makes 125K. We are not married yet, therefore we can each open a ROTH IRA account, contributing 5.5K annually ('till we're married).

 

now once we are married,

 

if we file jointly our combined gross income is going to be 225K which is higher than the IRS MAGI limit of 184k - 194K

if we file separately, the IRS MAGI limit is 0-10K

 

does that mean we won't be able to have a ROTH account once married? And what shall we do with the accounts we opened prior to being married?

 

 

It is my understanding that there is a loophole where one can contribute 5.5k to a traditional IRA, and then transferer the 5.5k to the Roth.  However, this negates the ability to deduct the 5.5k that was deposited into the traditional IRA. 

A couple of points:

- If your total combined salary is $225k, most likely your MAGI will be lower and you will be in the range to invest in a ROTH IRA.  If it is not, then what KTB004 is discussing is called a "Backdoor ROTH."  You can read more about it here:  http://www.rothira.com/what-is-a-backdoor-roth-ira.

 

- Remember however that all accounts (401(k), ROTH, Traditional, etc) are all Individual Retirement Accounts ie you each will own your own accounts even though you may be married.  Those accounts will remain individuals even when married.

 

- A common rule of thumb for retirement investing order of priority is the following:

1) 401(k) or 403(b) up to match from employer

2) ROTH IRA max ($5500)

3) Max 401(k) max ($18000)

4) Taxable investing

 

- Depending on one's student loans and rate (normally 5% or greater), it may make sense to stop putting money into retirement after steps 1 and 2 are completed, and put all additional money towards student loan debt.

 

- Lastly, having a sound asset allocation is almost as important as the deciding which vehicles to invest in.

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Question about Roth IRA:

 

I make 100K and my GF makes 125K. We are not married yet, therefore we can each open a ROTH IRA account, contributing 5.5K annually ('till we're married).

 

now once we are married,

 

if we file jointly our combined gross income is going to be 225K which is higher than the IRS MAGI limit of 184k - 194K

if we file separately, the IRS MAGI limit is 0-10K

 

does that mean we won't be able to have a ROTH account once married? And what shall we do with the accounts we opened prior to being married?

Yes, you may be up against the MAGI.  However the MAGI reduces the amount you can put into your ROTH by a complicated formula I am not competent to comment upon.  I am up against the same thing, but my tax guy (a CPA) says I am okay putting $5500 into my ROTH because I don't have a 401K (I have SEP-IRA), but wife shouldn't fully fund hers until we do taxes (she's ICU nurse and has a 401K).  

 

If you're making that much money, then I recommend you get a CPA to do your taxes.  You can afford it, and it will likely save you money.

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  • 1 year later...
On 11/27/2016 at 8:39 PM, SoCal_PA said:

I am a first year graduate and already nearing the salary ceiling (per the AAPA salary report). I like what I do but I know I am not going to be satisfied with this level of income. Anyone venture out of medicine and come out successful? Looking for some motivation. 

You have "SoCal" in your name.  Did you buy a home?  By a home live there for 5 years and turn it for $200k profit...then move out of state LOL

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