4

This chart here has the income restrictions for IRA deduction income limits. It does not use your AGI but a modified AGI.

I have been unable to find any resources detailing how this income restriction is affected by items such as pretax 401k, HSA, or other pretax retirement plans.

It looks like modified AGI for IRA purposes. But it's not clear since the example doesn't include any deductions.

For simple math, let's say:

  • Single, age 30
  • $5,500 IRA contribution
  • $80,000 income
  • $3,000 HSA
  • $17,000 401k

My assumption is your modified AGI would then be $80k-$3k-$17k = $60k, allowing a full IRA deduction of $5,500.

  • How do pretax deductions affect income for purposes of IRA deductibility?
5

The table that you linked to is how to calculate your Modified AGI. Only the items mentioned on that table affect your MAGI. Any items not listed on that table do not affect your MAGI, except insofar as they affect your "regular" AGI. For instance, HSA contributions are listed on IRS 1040 and will reduce your AGI, thus reducing your MAGI as well, because as you see on the first line of the table, the MAGI calculation takes AGI as a starting point (and then modifies it, hence the name).

The problem with your example is that you seem to assume the HSA and 401k are part of the 80k income and can be subtracted out, which isn't true, because the HSA an 401k contributions are over and above the taxable income. Things like HSA contributions aren't even part of your AGI, and they're not added in on that table, so they're not part of MAGI either.

  • 5
    @enderland - look at it this way. The steps start with an AGI calculation. From that, you modify by a few steps to get to MAGI. Pretax 401(k) and HSA don't even hit AGI, they are listed on one's W2 but not as taxable income. – JoeTaxpayer Aug 1 '14 at 18:05
  • 1
    @JoeTaxpayer that comment has been more useful than all the rest of this question trainwreck so far, thank you. – enderland Aug 1 '14 at 18:06
-1

The answer to your question is in this link that you posted in your question.

Worksheet 1-1. Figuring Your Modified AGI

Use this worksheet to figure your modified AGI for traditional IRA purposes.
  1. Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1.
  2. Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2.
  3. Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3.
  4. Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4.
  5. Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5.
  6. Enter any foreign housing deduction from Form 2555, line 50 6.
  7. Enter any excludable savings bond interest from Form 8815, line 14 7.
  8. Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8.
  9. Add lines 1 through 8. This is your Modified AGI for traditional IRA purposes 9.

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