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This has been an interesting tax year. Everything changed. My wife became a partner this year so is now in deep partnership debt, but at the same time is getting dividends and has a k-1. She moved from salary to production and finally is eligible for a(n unmatched) retirement plan. However, we won't have the retirement plan official and on the w-2 until 2016, so we can contribute to our IRA. Our MAGI is too high for Roth, but we could backdoor.
I have a small Roth and a larger traditional IRA (it was too much in taxes to backdoor everything). My wife has a shell traditional account and we have backdoored everything for her so far. After ups and downs, and underpayment, and getting it all squared away, we owe $250 to the feds and get a $450 refund from the state. Near even, and I'm very happy about that. But, because retirement isn't checked, I'm tempted to add to our IRAs (dipping into our liquid savings). To put it in a traditional will help our current year taxes, but going forward, all retirement funds are going into pre-tax accounts. We might not get much more into Roth, so that might be a good idea. However, given physician pay, I am assuming our retirement checks (even with RMD) will be much lower than what we currently make putting us in a lower tax bracket. So I'm wondering what the community would do?
1) Not add to IRAs, and keep the funds in liquid (.95% interest) availability (or be conservative safe and put it in a shorter term CD getting 1-2%)
2) Put the money into a traditional IRA to help the current year tax liability and assume our bracket will be lower in retirement. These pre-tax funds will be/are the majority of our retirement funds.
3) Back door Roth to diversify types of funds (pre-tax/post-tax), get no tax break this year but pay the high taxes from this year (our MAGI is 288K. Our MAGI won't be this high typically; part of that was from changing traditional accounts to Roth accounts and having the distributions, part was from this installment of a signing bonus, and part were from the K-1 dividends. We estimate future MAGI to be 240-260K)
Thanks
I have a small Roth and a larger traditional IRA (it was too much in taxes to backdoor everything). My wife has a shell traditional account and we have backdoored everything for her so far. After ups and downs, and underpayment, and getting it all squared away, we owe $250 to the feds and get a $450 refund from the state. Near even, and I'm very happy about that. But, because retirement isn't checked, I'm tempted to add to our IRAs (dipping into our liquid savings). To put it in a traditional will help our current year taxes, but going forward, all retirement funds are going into pre-tax accounts. We might not get much more into Roth, so that might be a good idea. However, given physician pay, I am assuming our retirement checks (even with RMD) will be much lower than what we currently make putting us in a lower tax bracket. So I'm wondering what the community would do?
1) Not add to IRAs, and keep the funds in liquid (.95% interest) availability (or be conservative safe and put it in a shorter term CD getting 1-2%)
2) Put the money into a traditional IRA to help the current year tax liability and assume our bracket will be lower in retirement. These pre-tax funds will be/are the majority of our retirement funds.
3) Back door Roth to diversify types of funds (pre-tax/post-tax), get no tax break this year but pay the high taxes from this year (our MAGI is 288K. Our MAGI won't be this high typically; part of that was from changing traditional accounts to Roth accounts and having the distributions, part was from this installment of a signing bonus, and part were from the K-1 dividends. We estimate future MAGI to be 240-260K)
Thanks
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