Larry McClanahan, Financial Advisor
@LarryMcClanahan
Unless you're an educator, self-employed, paying interest on student loans, or paying tuition/fees, there really aren't other options to help you reduce your modified adjusted gross income. For 2015, eligibility to contribute to a Roth IRA phases out for modified adjusted gross income of $116,000-$131,000 (single filer) and $183,000-$193,000 (married filing jointly).
However, if your income is too high to contribute directly to a Roth IRA, you might consider a "back door" strategy. This involves making a non-deductible contribution to a Traditional IRA and then converting it to a Roth IRA. The idea is to make the conversion soon after the contribution so you don't end up with taxable gains (on account growth).
The strategy loses its effectiveness if you have other pre-tax IRA balances because the taxable portion of any conversion must be pro-rated. On the other hand, that can often be addressed by transferring the pre-tax IRA balances into your 401(k) plan if the plan allows.
In 2015, those with sufficient earned income can contribute up to $5,500 to an IRA ($6,500 if age 50+) to take advantage of this strategy. Married with a non-employed spouse? You can also make a Spousal IRA contribution following the same strategy.
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