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Home › Forums › Financial Markets/Economics › Roth IRA income caps are discriminatory GARBAGE!

Viewing 9 posts - 1 through 9 (of 9 total)
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  • January 9, 2012 at 9:29 AM #19411
    ctr70
    Participant

    It makes my blood absolutely boil that if you make over $122k a year as a single person you can’t contribute to a Roth IRA. What a bunch of crap. More of the U.S. Gov. punishing financially successful people and anti-wealth garbage. What can’t ALL people take advantage of this awesome retirement program? Just makes me soooo mad I had to vent. $122k is freaking not even middle class in Coastal California! Arghh!

    January 9, 2012 at 2:37 PM #735592
    (former)FormerSanDiegan
    Participant

    Actually, there is a back door for “rich” people like you.

    The Government removed the income limit for Roth IRA conversions. So, you can contribute to a non-deductible IRA, then convert to a Roth. If you have no other IRAs this can be identical to just piutting it in a Roth.

    January 10, 2012 at 6:50 PM #735636
    ctr70
    Participant

    I will have to look into that. So if you put money into a “non-deductible” IRA you can immediately convert it to a Roth? So you have to convert every year you make a contribution? What is the cost to convert it? I have a SEP IRA too as I run a small business.

    I still think it is so bogus that they don’t take the income cap off the Roth. What a joke. $122k is peanuts in Cali.

    January 10, 2012 at 9:36 PM #735642
    pencilneck
    Participant

    Median family income in San Diego county is about $75,000. In what part of California is $122k considered peanuts?

    https://www.efanniemae.com/sf/refmaterials/hudmedinc/hudincomeresults.jsp?STATE=CA&choice=county&CITY=&FormsButton1=Search

    January 11, 2012 at 8:58 AM #735655
    (former)FormerSanDiegan
    Participant

    [quote=ctr70]I will have to look into that. So if you put money into a “non-deductible” IRA you can immediately convert it to a Roth? So you have to convert every year you make a contribution? What is the cost to convert it? I have a SEP IRA too as I run a small business.

    I still think it is so bogus that they don’t take the income cap off the Roth. What a joke. $122k is peanuts in Cali.[/quote]

    Yes, you would have to do it periodically (e.g. every year if you wanted to minimize tax impacts).

    If you had zero funds in other IRAs, then the cost is whatever your brokerage charges for opening (usually $0) and closing (~ $25 to $75). Taxes are based on the gains between when you opened the IRA and converted it to a Roth (essentially zero).

    HOWEVER (and this is what prevents me from taking advantage of this): If you already have substantial funds in existing IRAs it is less attractive, due to the fine print:
    The tax on the conversion to a Roth (if any) is determined by what would be taxable when accounting for all of your IRAs. Don;t know if a SEP counts (probably does). Consult a tax advisor.

    January 11, 2012 at 4:16 PM #735691
    patb
    Participant

    i’ve made above the limit, i’ve made below.

    suck it up.

    January 12, 2012 at 7:53 AM #735729
    (former)FormerSanDiegan
    Participant

    As long as we are whining about unfair tax laws. What about that F*%kin AMT. Now that sucks. It’s not fair. Just because someone lives in a high tax state, has a huge mortgage deduction and 3.4 kids. Not fair.

    January 13, 2012 at 1:33 AM #735778
    pokepud3
    Participant

    Why not use a sep ira? Doesn’t that do nearly the same thing?

    February 3, 2012 at 7:00 AM #737309
    just someone
    Participant

    Incorporate 😉 You can put 100k a year away as a business owner, and not just the measly 5k.

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