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Maximum IRA contribution limits

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Ronnie
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Maximum IRA contribution limits  Reply with quote  

Hi All,

I am new to this forum and joined because I am "getting up there" and realized I know very little about my retirement accounts and how to manage and grow them. I am quite embarrassed about it. But more importantly, I am trying to set a plan in motion for my retirement. I feel I have lost many years in ignorant bliss and not having a plan and not contributing my maximums. I have about 15 years before I retire - maybe more depending on future health (great now) and job market (I'm in high demand now, but peaking due to age) - though can't see either in my crystal ball.

I have some questions which I am sure are very basic. I did research to find answers, but am a bit confused with the "final answer". Any guidance would be very much appreciated.

Scenario: I am 50 years old, have an AGI of $181K (though will likely exceed that in 2015). I have 2 IRA accounts one a simple IRA through my current employer who puts in 3% and a traditional account from prior employment years. I also have a tax deferred annuity I can no longer contribute to from a prior employer - but I'll focus on that in subsequent threads, because I really have no clue what that account does or will do and will need to do more reading to at least ask quasi educated questions.

IRA focused Questions:
1. Does the 3% my employer contributes to my simple IRA count toward my maximum annual contribution?

2. What is my maximum annual contribution to the IRAs - I am married filing jointly with an unemployed, stay at home spouse (has never been employed, though may be in the future - 20 years my junior). Is my maximum contribution $6,500 or $13,000 annually?

3. Why cant I contribute to my IRA once my AGI is above 181K? I have really missed my window of opportunity here!! I could just cry.

Thank you in advance for bridging my ignorance gap!!
Post Fri Oct 03, 2014 12:26 am
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blixet
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This should help with question 1:

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-SIMPLE-IRA-Contribution-Limits

As to question 2:

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits

Not sure what you are referring to in question 3? Which IRA are talking about and where did you hear that there is salary cap? A cap on what kind of contributions? Roth IRA?

As to having missed our window... Not really. You have a lot of time. It is very common for people to get serious about retirement planning at around your age. In any case, it is water under the bridge. Great you are looking into it now! Knowledge is power.

Information is more valuable sold than used – Fischer Black
Post Fri Oct 03, 2014 1:09 am
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Ronnie
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@blixet... First, thank you for the information, it did clarify it for me. I am understanding the information to mean that I can contribute up to $14,500 annually to my employer provided Simple IRA plan and that is in addition to the 3% they contribute.

And, in answer to your question regarding the cap. It does look like it was talking only about the Roth IRA and not the traditional IRA. So I am taking this to mean there is no salary cap for the 2 types (simple and traditional) that I have. But I am also understanding that I can only contribute the max amount above between the 2 accounts.

So very technical with so many "if then" statements. Thanks again, the good news is, I can contribute an additional $8K annually of my own funds each year which is a relief - of course if i am understanding it all correctly.
Post Fri Oct 03, 2014 2:07 am
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blixet
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Ronnie, you might also want to check out IRS Publication 590:

http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230467

Scroll down to Tables 1-2 and 1-3. These tables show the income limits for deducting traditional IRA contributions when either you or your spouse is covered by an employer plan. You are phased out at $115,00 due to your SIMPLE IRA at work. If you are married and your spouse is not in an employer plan, her spousal IRA deduction would begin partial phase out at $178,000 and be totally phased out $188,000. Maybe this is where the $188k came from. Of course, if your spouse is covered with an employer plan, then the phase out is the lower $115k amount.

One option for dealing with non-deductible traditional IRA contributions in situations like yours where you are also likely either partially or totally phased out of a Roth IRA contribution is to do a "back-door" Roth IRA, i.e. contribute to the traditional and immediately convert to a Roth. But there are potential tax complications on the conversion based on existing pre-tax IRA account values, so investigate this one carefully before jumping into it.

Information is more valuable sold than used – Fischer Black
Post Fri Oct 03, 2014 1:24 pm
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