Today’s historically low individual tax rates, that are pending a reversion to higher rates in 2026, makes a strong case for funding a Roth today. So what can individuals do that have a MAGI above $137,000 and can’t contribute to a Roth in 2019?
For those individuals, there are a few things you can consider:
Does my company 401k plan offer a Roth option? If so, this is a route you can use to make sure your setting aside future tax free dollars.
Can you contribute to a Non-Deductible IRA? You should make sure you are not subject to the IRA Aggregation Rule to fund a non-deductible IRA.
Does your 401k plan allow for after-tax contributions? A caveat to this opportunity would be if you’re a business owner and your contribution would fail the nondiscrimination testing.
Doing a direct IRA Conversion to a Roth. You will want to consider conversion-cost averaging and be aware of potential changes to your tax bracket.
As you start to think about whether or not now is the right time to make Roth contributions and conversions, be sure to leverage your resources. Contact your tax professional and/or your financial professional to help you make the best decision possible for your personal situation.