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contribution limits on IRA/401k

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  • jacoavlu
    replied
    Originally posted by thyroxine View Post

    so you can't use your earned income twice. got it.
    Actually, you can, sometimes

    IRA contribution limit is the lesser of $6000 or your taxable compensation

    if you earn $6k at work and contribute $6k to 401k pretax your taxable compensation is zero. So no IRA

    if you elect $6k Roth deferral your taxable compensation is still $6k so you can contribute $6k to an IRA.

    make sense?

    Leave a comment:


  • thyroxine
    replied
    Originally posted by Peds View Post

    you can, but not how you wrote it.
    once you contribute your max income to a t401k, you no longer have earned income that qualifies you for a rIRA.
    however you could contribute to a r401k, thus preserving your earned income and use the gift to fund the rIRA.
    so you can't use your earned income twice. got it.

    Leave a comment:


  • Peds
    replied
    Originally posted by thyroxine View Post
    this is a weird question, but let's say you have 6000$ of income + 6000$ gifted from a parent in one calendar year.

    could you contribute 6k to a roth IRA and 6k to a 401k?

    basically, i'm asking can you count your 6k of income twice?
    you can, but not how you wrote it.
    once you contribute your max income to a t401k, you no longer have earned income that qualifies you for a rIRA.
    however you could contribute to a r401k, thus preserving your earned income and use the gift to fund the rIRA.

    Leave a comment:


  • Yowza
    replied
    You can contribute up to $19,500 in a 401k in 2020. That's apart from the 6k toward the Roth IRA.

    Leave a comment:


  • thyroxine
    replied
    Originally posted by JBME View Post
    you need $6k in EARNED income (not a gift, rather through a 1099 or W2) to contribute to a Roth IRA. If you earn $6k and put all $6k in there and your parents gift you $6k that is fine...it's almost as if you didn't contribute to your Roth IRA. But no you can't just take their $6k and put that into your Roth IRA because your contribution limit for 2020 is $6k
    Right, I understand that. But my question is could you contribute another 6k to a 401k in the same year.

    Leave a comment:


  • JBME
    replied
    you need $6k in EARNED income (not a gift, rather through a 1099 or W2) to contribute to a Roth IRA. If you earn $6k and put all $6k in there and your parents gift you $6k that is fine...it's almost as if you didn't contribute to your Roth IRA. But no you can't just take their $6k and put that into your Roth IRA because your contribution limit for 2020 is $6k

    Leave a comment:


  • thyroxine
    started a topic contribution limits on IRA/401k

    contribution limits on IRA/401k

    this is a weird question, but let's say you have 6000$ of income + 6000$ gifted from a parent in one calendar year.

    could you contribute 6k to a roth IRA and 6k to a 401k?

    basically, i'm asking can you count your 6k of income twice?
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