Background: Last year I was making well under the Roth IRA income limit, but after some raises and bonuses this year, I'm starting to toe the line with the income limit.

I've done some research and all that I've managed to find is basically for 2020 the limit is $124,000 and for 2021 it's $125,000 for single filers, along with a table of different filing statuses and income ranges.

However, I'd like to know what "income" that's referring to. Is that:

  • Year to date, meaning if I can contribute until my income change this year. For the first half of this year I was making ~15k under the limit. I'm assuming this is not the case, and it's total for the year. If for the year I go over the limit, I need to calculate the lower limit I'm allowed to contribute based on how far over the limit I am.
  • Last year's tax filing, meaning I as long as my MAGI based on last year's tax return was under the limit I can contribute for the full year.
  • Up until I file my taxes for last year. This is a modified version of the point above. For example, I might not submit my taxes until February / March, so what if I contribute through then, do my 2021 taxes, and only then find out I don't qualify until I get my tax documents and submit my taxes?

Basically I don't like the idea of having to constantly do the math to account for mid-year raises / bonuses to make sure I'm not going over the Roth IRA income limits and am considering switching to contributing to my company's Roth 401k instead.

2 Answers 2


It's your Modified AGI for the tax year of the contribution, which is the total for the entire tax year but may be less than your gross income.


This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If you discover that you have already over-contributed for the year, then you should talk to a tax pro to find out what your options are and what's best for you.

But, using the company's Roth 401(k) may be an even better option, since it scales directly with your income (and manages the limit for you).

I would also note that if you are in this high of an income bracket, a Roth IRA or 401(k) may not be your best choice. The bet on Roth contributions is that you pay tax now in exchange for not paying tax later, versus deferring your tax until you withdraw. If you are in a higher tax bracket now than when you withdraw, you'll be better off deferring the tax (even if it's on a higher amount) until you withdraw.

  • Appreciate the clarification and good point on income scaling with the company Roth 401k. My bet with Roth vs Traditional is over the next 30ish years before I retire, my $500 per month post-tax will add up to $180,000 invested. Over 30 years that could grow to (speculating) $500,000. That's $320,000 of growth I don't pay any taxes on. Oct 26, 2021 at 13:54
  • 1
    True, but compare that to investing $658 per month (The pre-tax equivalent of 500 before a 24% tax deduction) over 30 years and paying a 24% tax on that.
    – D Stanley
    Oct 26, 2021 at 14:07
  • I know this is slightly off topic, but if I understand your point, you're saying if I invest $500 into a Roth, paying $158 per month, at 6% interest (speculating), I end up with $502,000 at the cost of $56,880 in taxes; so in total $445,120. Compared with $658 per month I end up with $661,000 at the cost of $158,640; so in total $502,360. Therefore, traditional is better in my scenario? Oct 26, 2021 at 14:28
  • They should be the same if the tax rates are the same (I rounded the $658). The bet on Roth vs traditional is that your tax bracket is lower now than at retirement, so you're paying tax now to get tax free growth versus paying no tax now but tax on the growth.
    – D Stanley
    Oct 26, 2021 at 14:31
  • The final result between IRA vs Roth IRA will not be the same even if your final tax bracket is the same for 1 critical reason: graduated tax brackets. Withdrawing from an IRA up to your standard deduction is tax free all around, and from there the brackets are low until you breach the final bracket. All those dollars you withdraw up until then, you have saved over using (solely) a Roth IRA. Really, it is best to have a balance of both, but probably lean heavily on traditional if your income is high.
    – BlackThorn
    Oct 26, 2021 at 23:50

Basically I don't like the idea of having to constantly do the math to account for mid-year raises / bonuses to make sure I'm not going over the Roth IRA income limits and am considering switching to contributing to my company's Roth 401k instead.

Why not both?

As D Stanley said, use the Roth 401(k) because it has no income limit.

IRA contributions can be made through April 15th for the previous tax year. Thus you could figure your final income number for the previous year and decide your IRA strategy after you get the final number. (Note that there are some exotic IRA strategies for those over the IRA income limit, but I'm limiting the scope of this answer to people under the limit).

Apart from income limits, note that the contribution limits for 401(k) and IRA are in separate buckets. If you are allowed to fill both buckets, then consider doing so. Here's an IRS info page that may help.

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