I have been reading a lot about personal finance and opening a Roth IRA is encouraged but I also read that your Maxi Adjusted Gross Income (Magi) needs to be below $118K for single and $183K for couples and I was wondering if pharmacists qualify with our income. Also any personal finance tips you have are much appreciated. Trying to get educated about money before graduation. Thanks
Can pharmacists contribute to a Roth IRA?
- Thread starter RimzyA
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We pretty much don't qualify, unless you're in a low pharmacist wage state/market, but you can do the back door Roth by funding a traditional IRA and converting to a Roth. Do
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The only reason you probably would want to contribute to a roth account is if you maxed all your pretax options already. This would usually mean 18,000 into your company 401k plan. If you still had money after this to invest, you can do the "backdoor" roth ira at an additional $6k. You are doing some good thinking though, remember that any time you spend learning about money will be more financially valuable than any other activity you will ever do.
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Yep, Backdoor Roth IRA. Make a traditional IRA. Just put it into a money market account because it will only be there for 1 day. You must declare this as a nondeductible IRA on Form 8606 on your tax return. The next day, convert it to a Roth IRA. This is also declared on Form 8606.
Be careful if you have any other traditional IRAs that you received a tax deduction on before. If you do, you'll have to pay taxes on a proportion of this when you do a Roth IRA conversion. To avoid this, you could roll the traditional IRA into a 401k first.
Also, the $116k MAGI limit does not include 401k deductions. So you could potentially gross up to $134k - $18k 401k and still come under the limit.
Be careful if you have any other traditional IRAs that you received a tax deduction on before. If you do, you'll have to pay taxes on a proportion of this when you do a Roth IRA conversion. To avoid this, you could roll the traditional IRA into a 401k first.
Also, the $116k MAGI limit does not include 401k deductions. So you could potentially gross up to $134k - $18k 401k and still come under the limit.
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I do - my wife and I's MAGI is around 180 (we each max out of 403b's at 18k) then we can each put 5500 (I think that is the max next year?) into our roth iras
