So that meant fully contributing to your company 401(k) plan, fully funding your deductible IRA
By combining the standard deduction ($6,300) and the maximum deductible IRA
contribution ($5,500) for 2016, a child could earn $11,800 of wages and pay no income tax.
While many of the past articles cited below relate to the conversion of a traditional deductible IRA
to a Roth IRA, the same considerations are important in evaluating an in-plan Roth rollover under the provisions of the ATRA.
If your client hasn't yet made a 2013 IRA contribution and you are wondering if they can make a deductible IRA
contribution now, here are the three questions you must ask to find out the answer.
One way to shelter D's investment income is by making a deductible IRA
* Traditional deductible IRA
. Your contributions may be fully or partially deductible and your savings grow tax-deferred, but your withdrawals are taxable.
Is the client eligible for a deductible IRA
and were contributions made to it?
The maximum annual deductible IRA
contribution for an individual is the lesser of (a) the maximum annual contribution amount or (b) the individual's earned income1 The maximum annual contribution amount is $5,000 in 2009.
For married individuals filing a joint return, if only one spouse is a participant in an employer-sponsored plan, the limit on deductible IRA
contributions applies only to the participant spouse.
At the other end of the tax leverage spectrum is the corresponding before tax investment of $1,538.46 [$1,000 / (1 - 0.35)] in a fully tax deductible, fully tax deferred vehicle such as a contribution to an IRC Section 401(k) plan, deductible IRA
, a qualified pension plan, profit-sharing plan, IRC Section 403(b) TDA, SEP or SAR-SEP IRA, or SIMPLE IRA.
If $3,000 before taxes is invested in a tax deductible IRA
, the $3,000 would grow to $9,000, be taxed at 33.33 percent and yield $6,000 in after tax cash.
If you are unable to make a deductible IRA
contribution because of "active participation" in an employer provided plan, your spouse may still be able to make a deductible IRA