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Hey all,
I have a question on the allocation of my wife and mine's retirement.
I will be graduating next June from residency, and I fully expect that the 6 months of attending-hood from July-December will put us in an income bracket that will phase us out of eligibility for Roth contributions. My wife makes ~$80,000 per year, and so both of our automatic retirement fundings are Roth contributions. Come July, however, my income will jump and we will probably switch to the traditional contributions.
My question is how to allocate our retirement contributions beginning in the new tax year for 2018. Should we switch our contributions before the new year so that the money goes in pre-tax with the assumption that our combined income will be over the limit by years end? Can we retroactively make our contributions pre-tax once we start earning a higher income? I don't want to pay an unnecessary penalty if we contribute Roth dollars prior to attending-hood, only to have a big penalty at years end which would negate some of our contributions up to that point.
Not sure how to navigate the situation. Any help would be appreciated. Thanks!
I have a question on the allocation of my wife and mine's retirement.
I will be graduating next June from residency, and I fully expect that the 6 months of attending-hood from July-December will put us in an income bracket that will phase us out of eligibility for Roth contributions. My wife makes ~$80,000 per year, and so both of our automatic retirement fundings are Roth contributions. Come July, however, my income will jump and we will probably switch to the traditional contributions.
My question is how to allocate our retirement contributions beginning in the new tax year for 2018. Should we switch our contributions before the new year so that the money goes in pre-tax with the assumption that our combined income will be over the limit by years end? Can we retroactively make our contributions pre-tax once we start earning a higher income? I don't want to pay an unnecessary penalty if we contribute Roth dollars prior to attending-hood, only to have a big penalty at years end which would negate some of our contributions up to that point.
Not sure how to navigate the situation. Any help would be appreciated. Thanks!
