Can I use a 401(k) contribution to qualify for a Roth IRA?

March 16, 2005

Date:  22 Feb 2005
From:  Richard

I am getting so many conflicting reports from tax accountants and lawyers. Please help me get the answer to this. Do contributions to a 401(k) plan reduce adjusted gross income so that I can get under the $150,000 limit and contribute to a Roth? For example, if someone has income of $160,000 before a 401(k) contribution of $14,000, is he or she eligible to contribute to a Roth, also?

Answer

Date:  04 Mar 2005

Hello Richard,

Yes. Unlike regular IRAs, participation in another qualified plan doesn't disqualify a taxpayer from participating in a Roth. The limitation is based on "modified adjusted gross income". See pages 54, 56 and 72 of IRS Publication 590 for worksheets to compute the limitation amount. The IRS web site is www.irs.gov.

Good luck!
Mike Gray

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