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If I fall into the phase-out range for a tax deduction on a Traditional IRA can I contribute to said account up to my tax deduction limits for said accounts then contribute the rest of my $ to a Roth IRA to reach my overall contribution limit for IRAs in general?

  • Are you also making contributions to or eligible for some other form of tax privileged account, such as a 401K, 403B, or 457? That can have an effect on what you are allowed to contribute to an IRA – Chuck van der Linden Jun 15 '11 at 20:14
  • Yes I do pay into a 401k, but not quite the yearly max. I'm still at 11-12k contribution / yr. – user1966 Jun 16 '11 at 0:38
  • @ChuckvanderLinden: It does not matter whether you are making contributions, only whether you are covered. Also, it does not affect what you are allowed to contribute; only what you are allowed to deduct. – user102008 Apr 25 '12 at 23:24
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Yes. Without going into the exact numbers, the Roth cutoff is well above the Traditional IRA cutoff, so those right in the Traditional Phaseout range can put the otherwise non-deductible amount into a Roth. You can have deposits to both flavors of IRA so long as the total isn't over $5000 or $6000 if 50 or older.

  • 1
    Your "cutoff" means different things in those two places -- one is a cutoff for Roth IRA contributions; the other is a cutoff for Traditional IRA deductions (there is no cutoff for Traditional IRA contributions) – user102008 Apr 25 '12 at 23:22
  • Indeed, that's right. If covered by a retirement account at work, there's first a cutoff for IRA deductibility, then for Roth deposits. At any level of income one can deposit, but not deduct, the IRA. – JTP - Apologise to Monica Apr 25 '12 at 23:50
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Per the IRS you are able to contribute up to the limit on a traditional IRA no matter what your income, but if you earn too much the amount which is tax-deductible may go down. There is a limit on Roth IRA contributions if your income exceeds a certain amount.

If you are under 50 years of age at the end of 2011: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2011. This limit can be split between a traditional IRA and a Roth IRA but the combined limit is $5,000. The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income.

Read more at the IRS page.

To answer your question, it depends. I haven't done the math, but the IRS publication provides a form which lets you enter your AGI, the amount deducted for your traditional IRA contribution, and tells you how much you are allowed to contribute to your Roth IRA.

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The answer is yes, you're allowed to contribute to a mix of Roth and traditional IRAs at any time as long as you do not exceed the annual IRA contribution limits ($5000 this year)

  • -1 Very incomplete and, to a certain extent, downright incorrect, answer. See JoeTaxpayer's answer for the facts. – Dilip Sarwate Apr 26 '12 at 2:37
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Contributions to either type of account (traditional or Roth) are combined when figuring the limits and what you are allowed to contribute.

Being covered by a retirement plan at work has a significant effect on what you can contribute to an traditional IRA, depending on your income level.

See This Page at the IRS website

I would surely seek confirmation or clarification from a tax expert (I'm NOT one) but the way I am reading what they have, there can be a situation where the presence of an employer sponsored plan and qualifying income levels could prevent you from being able to deduct any traditional IRA contributions from your AGI, but you would still be able to contribute to a Roth if your income was below the cutoff point for Roth contributions.

For something like this I would highly recommend consulting with a CPA or the IRS directly, since there are a lot of variables that affect what you are allowed to do when contributing to an employer provided plan and IRA's at the same time, especially if your income is near the phaseout ranges

  • "Being covered by a retirement plan at work has a significant effect on what you can contribute to an traditional IRA, depending on your income level." This is incorrect. You can ALWAYS contribute up to $5000 on a Traditional IRA if you earned at least $5000. Whether it's deductible is another matter – user102008 Apr 25 '12 at 23:17

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