Hi,
I am still relatively new to all of this so I apologize if this is a dumb question.
I have been maximizing my contributions to my employer 403b, HSA, and have now done backdoor Roth conversions the past two years. I am a physician who recently started in practice and, like many physicians, basically followed the instructions from WCI and from what I have been told by colleagues word-of-mouth.
I was talking finances with another physician who just graduated and the question arose as to why one would do a backdoor Roth conversion as opposed to just contributing to a traditional IRA and taking the deduction. I could not come up with an explanation of why not to do this off the top of my head.
Looking into this, I am assuming we (my colleague and I) cannot do this because we are covered by a workplace retirement plan (401K) and because our MAGI is greater than the phase-out limit of $87,000 (single) or $143,000 (married), i.e. we would not be able to take any deduction, and thus a Roth conversion would be more favorable. If we hypothetically were not covered by a workplace plan, then contributing traditionally and taking the deduction would potentially be more favorable (due to much higher/no income limits).
Is that correct? Thank you, still learning the ropes here.
I am still relatively new to all of this so I apologize if this is a dumb question.
I have been maximizing my contributions to my employer 403b, HSA, and have now done backdoor Roth conversions the past two years. I am a physician who recently started in practice and, like many physicians, basically followed the instructions from WCI and from what I have been told by colleagues word-of-mouth.
I was talking finances with another physician who just graduated and the question arose as to why one would do a backdoor Roth conversion as opposed to just contributing to a traditional IRA and taking the deduction. I could not come up with an explanation of why not to do this off the top of my head.
Looking into this, I am assuming we (my colleague and I) cannot do this because we are covered by a workplace retirement plan (401K) and because our MAGI is greater than the phase-out limit of $87,000 (single) or $143,000 (married), i.e. we would not be able to take any deduction, and thus a Roth conversion would be more favorable. If we hypothetically were not covered by a workplace plan, then contributing traditionally and taking the deduction would potentially be more favorable (due to much higher/no income limits).
Is that correct? Thank you, still learning the ropes here.
Statistics: Posted by breakfastinbed — Sat Aug 24, 2024 11:11 pm — Replies 7 — Views 693