Due to the regulations that have been put in place it is difficult for those who are high earners to be able to contribute to a Roth IRA. For individuals, the maximum amount of modified AGI that an individual can have for the 2015 year is $131,000 and for married couples, the maximum income allowed is $193,000. If your MAGI over these amounts, you are not allowed to contribute to a Roth IRA.
For many people their AGI and MAGI is the same, but there are ways that they can vary somewhat depending on different deductions, which may make it possible for you to contribute to these types of retirement plans even if you earn more than these amounts.
For starters, you should keep in mind that any funds that travel through your health care flexible spending account will not be reflected in your MAGI. This is the account that you use to place pretax money into in order to pay for medical items that are not covered by insurance. The maximum that you can add to this account is $2550, although if you are married and employed, both of you can contribute this amount. When you use this account, you may be able to lower your MAGI enough so that you are able to contribute to a Roth IRA.
Dependent care flexible spending accounts are also deducted from your MAGI and are quite beneficial if you have children. For parents, who are working and have children, they are able to put aside up to $5,000 in order to pay for the costs related to daycare. Retirement plans are easier to qualify for if you rely on this deduction to your MAGI.
You can also deduct the up to $3,000 in losses that you have seen with your portfolio. In order to lower your MAGI, it may be a good idea to trim your portfolio and sell off some of those losing stocks. If you have more than $3,000 in losses, you can carry the amount over for future years as well.
Finally, if your place of employment offers a Roth 401(k) or 403(b), you will be able to contribute to the retirement plan regardless of the amount that you make. This is a fantastic option for those who are high earners and may make it easier for you to contribute to a Roth IRA.
In order to learn more about all the different ways that you can contribute to a Roth IRA, be sure to rely on the services of Richard Cayne. He is currently the CEO of Asia Wealth Group Holdings and offers consulting services to families who are looking to build their financial future.
Richard Cayne Japan has provided assistance to many high net worth families in the Tokyo Japan area. The company is also involved with areas in Thailand and Richard Cayne Thailand has also been helpful to families as well. Learning the proper ways to contribute to a Roth IRA is one of the best ways to prepare for your future.