Hi,
I'm considering making one final contribution to Roth IRA for 2011 before leaving the U.S but I'm concerned about exceeding the AGI limit for contributions. Is this thinking correct?
1) My 1040 for 2011 would have to report U.S income before leaving and Canadian income after leaving.
2) I won't be able to use 2555 for Canadian wages since I'm not moving until the summer (won't meet any of "tests")?
EVen if I could use 2555, does that factor into the modified AGI figure used for roth contribution elgibility? In U.S, you can contribute to 401k to reduce AGI and make roth contributions.
Contributing to roth IRA prior to leaving U.S
Moderator: Mark T Serbinski CA CPA
Sorry, I did some more research on my own.
I can see that the "modified agi" figure used to determine elgibility for Roth contribution includes foreign income. So 2555 is of no use there.
Looks the like the only way to preserve the ability to make a roth cont before leaving is to fully fund 401ks to shelter income from modified AGI?
I can see that the "modified agi" figure used to determine elgibility for Roth contribution includes foreign income. So 2555 is of no use there.
Looks the like the only way to preserve the ability to make a roth cont before leaving is to fully fund 401ks to shelter income from modified AGI?
Just to clarify, you will be allowed to use 2555, since you will at some point in 2012 meet the tests.
The normal way to use 2555 in the year you leaeve US (and this is how all americsns do it) is by prorating the exemption for the number of days you will be out of the country.
Back to Roth, the importance of roth contribution is not in the personal roth contribution you can make for the tax year, but in the CONVERSION of other sheltered accounts, such as IRA and 401(k) etc.
It would be much more advisabel for you to convert as much as you can than to not convert simply to add 5K to your Roth.
sacrifice the measly 5K you can contribute and focus your attention on doing the conversions.
There is no AGI limit on these conversions anymore.
The normal way to use 2555 in the year you leaeve US (and this is how all americsns do it) is by prorating the exemption for the number of days you will be out of the country.
Back to Roth, the importance of roth contribution is not in the personal roth contribution you can make for the tax year, but in the CONVERSION of other sheltered accounts, such as IRA and 401(k) etc.
It would be much more advisabel for you to convert as much as you can than to not convert simply to add 5K to your Roth.
sacrifice the measly 5K you can contribute and focus your attention on doing the conversions.
There is no AGI limit on these conversions anymore.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks! Glad to hear I can use a pro-rated 2555 for some income exclusion.
I hear what you are saying. I was already planning on doing the conversion.
I was just considering trying to squeeze another 10K (mfj) in there for 2011.
What I read (and this suprised me) is that conversion income does not count against modified AGI. I have no idea why (some kind of special "exception" I guess) but it makes it feasible to make a large 401K to Roth conversion and contribute in the same year.
I hear what you are saying. I was already planning on doing the conversion.
I was just considering trying to squeeze another 10K (mfj) in there for 2011.
What I read (and this suprised me) is that conversion income does not count against modified AGI. I have no idea why (some kind of special "exception" I guess) but it makes it feasible to make a large 401K to Roth conversion and contribute in the same year.
Correct, by talking about 401(k) to reduce agi, I thought your income was already high. The conversion no longer counts towards roth.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
We are right on the edge. On an annual basis, if we both max out our 401Ks we can both make full Roth. I don't expect that to change much after moving.
Looking ahead though, if we front-load 401k contributions prior to moving then we can preserve our Roth contribution elgibility for the year. If we don't do it that way our AGI will be to high since there is no way to "shelter" anything once we take up canadian residency.
Sound correct?
Looking ahead though, if we front-load 401k contributions prior to moving then we can preserve our Roth contribution elgibility for the year. If we don't do it that way our AGI will be to high since there is no way to "shelter" anything once we take up canadian residency.
Sound correct?