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Thinking ahead to 2013...
My family is right on the border income-wise where we are close to being ineligible to contribute to a Roth IRA. Historically I have thought it was a good idea to max out the IRA before putting into the 401K, because my 401k is not matching. But...if I max out the 401K (and ESA plan, and dependent care contributions), I believe my AGI will fall below the $178K threshhold, thus making my Roth contributions 100% eligible. So in my case I am thinking this year to max out the 401K first, then do the Roth. Does this make sense to anyone?
Yes, that is perfectly rational because those payments (401k, ESA and dependent care) will reduce your AGI and are not part of the "modified" AGI used for the $178,000 income limit for 2013. That's assuming you have the disposable income to do all that. Also, if your employer offers a flexible spending account for medical expenses, contributions to it will further reduce your AGI.
And of course, even if you go over the 178,000 level, the contribution phases out from 178,000 to 188,00 so you'd still be able to make a reduced Roth contribution (until your AGI goes over 188,000). Good luck, hope this helps.
"Don't half-ass two things; whole-ass one thing" - Ron Swanson
do you owe taxes at the end of the year?
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