Modified adjusted gross income calculation and 401k/IRA contributions

1 Answers

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  +1 Votes 1  0

  Pinyo on Jun 02, 2010

  Unfortunately, calculating Adjusted Gross Income (AGI) and Modified AGI is more complex than the scenario presented here and thus I can’t answer your question precisely.

  Fairmark.com has a good explanation of how these two numbers are calculated and there are a number of factors involved.

  As far as eligibility to invest in IRA for 2009, Fairmark also offers good explanation as follow:

  • Traditional IRA. Participation in a retirement plan maintained by your employer does NOT affect the amount you can contribute to a traditional IRA — but may affect the amount you can deduct when you make a contribution. Your deduction is reduced or eliminated if your modified AGI exceeds certain levels.
  • Roth IRA. The rules are different for Roth IRAs. Here, participation in an employer plan does NOT affect your deduction — you get no deduction in any event. But your contribution is reduced or eliminated if your modified AGI exceeds certain levels. In addition, for years before 2010 you’re not permitted to convert a traditional IRA to a Roth IRA if your modified AGI exceeds $100,000 in the year of the conversion.

  I hope this helps.