I have read that Traditional IRA and Roth IRA benefits appear to phase out beyond certain income limits. Assuming the following:

  1. I don't have access to any 401k plans through my employer
  2. My income crosses the maximum threshold making me ineligible to contribute to any form of IRA

What other tax-advantaged options do I have access to, for retirement savings?

  • 1
    2012 info, but the gist remains the same: @JohnBensin is correct. If you aren't covered by your employer, there are options as shown in this infographic trustetc.com/equity-university/… Commented Oct 3, 2013 at 13:40
  • "My income crosses the maximum threshold making me ineligible to contribute to any form of IRA" There is no such thing. There is no income limit for contributing to Traditional IRAs.
    – user102008
    Commented Oct 4, 2013 at 8:54

1 Answer 1


If you're not covered by a retirement account at work and earn a high income, you're still eligible to contribute to a traditional IRA. Income limits only apply to Roth IRA's, not traditional IRA's. You may not be able to deduct your contributions to a traditional IRA, however. The IRS publication on traditional IRA's has detailed information on this.

  1. If you file as single, head of household, or qualifying widow(er), you can take a full deduction up to your contribution limit ($5,500 if you're under 50, $6,500 if you're 50 or older).

  2. If you're married filing jointly or separately with a spouse who is not covered by a plan at work, the same points in #1 apply.

  3. If you're married filing jointly, and your spouse is covered by a plan at work, you can take a full deduction if your adjusted gross income is less than $178,000. If you're AGI is more than $178,000 but less than $188,000, the deduction begins to phase out, and above $188,000, you can't deduct the contributions.

  4. If you're married filing separately with a spouse who is covered by a plan at work, you're eligible for a partial deduction only if your AGI is less than $10,000. Otherwise, there is no deduction.

After you contribute to a traditional IRA, with or without a tax deduction, you can perform a backdoor Roth IRA conversion, in which you convert your traditional IRA to a Roth to take advantage of the 100% tax-sheltered status of the Roth IRA. This may not be optimal, given that you're currently in a high tax bracket and will pay taxes on the conversion; it may be to your advantage to wait until your income is lower, or simply forgo performing the conversion at all.

Either way, you still derive a tax benefit from the IRA. With the traditional IRA, your contributions grow tax-free, and you only pay income taxes when you withdraw your distributions. With the Roth IRA, you'll pay the taxes on the contributions when you roll them over, but your earnings grow tax-free and aren't taxable when you withdraw them.

A note of caution. If you perform a rollover to a roth IRA, be careful if you already have money in a pre-tax account like a traditional IRA. Bogleheads sums this up better than I could, so I'll defer to them:

If you have any other (non-Roth) IRAs, the taxable portion of any conversion you make is prorated over all your IRAs; you cannot convert just the non-deductible amount. In order to benefit from the backdoor, you must either convert your other IRAs as well (which may not be a good idea, as you are usually in a high tax bracket if you need to use the backdoor), or else transfer your deductible IRA contributions to an employer plan such as a 401(k) (which may cost you if the 401(k) has poor investment options).

  • Since he's "high income", a conversion to Roth IRA probably is not optimal now.
    – user102008
    Commented Oct 4, 2013 at 8:59
  • @user102008 True, updated. Commented Oct 4, 2013 at 11:12

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