But where was the cut-off? As I interpret IRS Publication 590, what I think it boils down to in my case, a married filing jointly, is this. Take the upper limit they give you, which in my case is $103,000, subtract your Modified AGI and multiply the result by 0.2. For $83,000, it is the full $4000. For $90,000 AGI its $2600, and for $100,000 AGI, it is only $600 dollars a year that can be deducted. You can still put more in up to the limit of $4000 for 2007 (it goes to 5K in 08), it is just not deductible on your taxes. The numbers are different for people who file singly or separately, or who aren't covered by an ESP.
So in going forward, I will need to consider this possibility if our income rises. Since I only have $100 a month going into it currently, I should be good for awhile. But this is not something I had anticipated when I decided to work towards bringing my SIMPLE-IRA contributions down and putting more into a self directed IRA, while still deferring the taxation on that same amount of money. Which is the only reason that I even consider it in addition to the Roth, except with regard to the idea of earning money on Uncle Sam's dollar for a change.
It is an interesting quandary. Compared to some previous periods in my life, it is a actually a good quandary to be in. It is indicative that the good Lord has been good to us, even if the IRS hasn't.
[Update: 5/2/08] I closed the sucker. I got tax deferment with the simple IRA and no-tax with the ROTH. Bases covered.
Labels: "Personal Finance"