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.