Roth IRA

[Guest JoeMud]

I would greatly appreciate if someone could explain the "phase out" limits on a Roth IRA for married/joint filer with income over $150k. I cannot find the formula in the Roth regs. Thanks

[Mary Kay Foss]

The phase out works like this:

(1). If Modified Adjusted Gross Income (which is defined in the Roth regs) is less than $160,000 but more than $150,000, subtract $150,000 from your actual Modified Adjusted Gross Income. (2). Divide the difference by the width of the phaseout range ($10,000) to determine the percentage that is not deductible. (3). Multiply the percentage by the maximum contribution ($3,500 or $3,000 depending upon your age). (4) Subtract the result in (3) from the maximum contribution. (5) If the remaining amount is $200 or more, that's your contribution limit. If it's greater than $1 but less than $200, you can contribute $200.

A piece of cake, right?

[Appleby]

Here’s a very good illustration

Check middle of the page

http://www.investopedia.com/university/ret...ns/ira/ira2.asp

[MGB]

See page 54-55 of IRS Publication 590:

http://www.irs.gov/pub/irs-pdf/p590.pdf

[Guest JoeMud]

Thank you very much for each speedy response. They were all very helpful.