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Predicting $191k AGI for 2019, direct or backdoor Roth?

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  • Avatar Riverman22 
    Participant
    Status: Resident
    Posts: 21
    Joined: 01/05/2018
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    I am starting my first job in June and am anticipating mine and my spouse’s AGI to be ~$191k for 2019.  With any unforeseen changes or a bump in my production it could easily exceed the $193k income limit.  I know I will be doing backdoor contributions in the future so should I just start doing it now?  The reason I want to do it now is because I have the cash on hand and want the money in the market.  It will also prevent me from having any urges to spend the money on other less important things.

    #205529 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3789
    Joined: 01/08/2016

    Yes backdoor. Too close.

    #205534 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 399
    Joined: 06/12/2017

    Agree with Peds, you’re so close that it’s safer to just do the Backdoor Roth, rather than risking having to recharacterize if you go over the income threshold.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    http://www.fswealthadvisors.com | (717) 496-0900

    #205536 Reply
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 100
    Joined: 09/05/2018

    The only reason not to do backdoor is a few extra steps / forms, no big deal especially since you need to learn how to do them anyways for future years and WCI has a good tutorial on it.

    I thought there was new law prohibiting you from recharacterizing roth to traditional. If so the downside to going roth and then realizing you significantly undercalculated MAGI is fairly large.

    #205611 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2253
    Joined: 01/03/2017

    Backdoor. You’ll have to wait the extra few days for the funds to clear but will only take you an extra minute or so total.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #205638 Reply

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