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The only situations I can think of where Roth might make sense are 1) early stages of your career, before you hit the 28% marginal rate and 2) if you are still
by tcoppi 10y ago
The only situations I can think of where Roth might make sense are 1) early stages of your career, before you hit the 28% marginal rate and 2) if you are still eligible for a Roth, but already maximized your other tax-advantaged space in 401(k)s and IRAs.
- sparky_z 10y ago> if you are still eligible for a Roth, but already maximized your other tax-advantaged space in 401(k)s and IRAs. Under what conditions could this occur?
- Willson50 10y agoWhen you make under $132,000 but were still able to contribute $18,000 to your 401k.
- loeg 10y agoIf you make more than ~$62k (single earner) and have an employer 401(k) program, you're not eligible to deduct traditional IRA contributions. (Non-deductible traditional IRA contributions get a worse tax treatment than a taxable brokerage account.) At very roughly $120k-$130k (single earner; I forget the exact figure) you're no longer eligible for Roth IRA contributions. However, you can make non-deductible Traditional IRA contributions and then do a Traditional-to-Roth conversion (not "recharacterization"). This is known as a "Backdoor Roth IRA contribution" and is legal and explained in nauseating detail on the internet. So: > Under what conditions could this occur? If you make more than ~$62k, have an employer 401(k), and contribute the maximum to it, funding a Roth IRA is a good idea. (Unless you have an existing traditional IRA balance which would make backdoor Roth funding counter-productive due to the pro rata …. blah blah. If you don't have an existing Traditional IRA balance it's not a problem.)
- deleted 10y ago[deleted]
- graton 10y agoWhen you want to do a back-door Roth IRA for one. http://www.rothira.com/what-is-a-backdoor-roth-ira http://www.rothira.com/what-is-a-backdoor-roth-ira