Reply to What is the deal with a Roth IRA?

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[quote=Anonymous][quote=Anonymous]Resurrecting this old thread because these are the exact issues I still have. Can someone break this down for me or even give me the IRS code sections or refer me to a fee only financial advisor in NW DC? Our HHI is about $200k and we each contribute to our company's 401k. Not sure what people mean when they say to max it out but I contribute up to 4% because that's what my company matches. I have a standard IRA that I stopped contributing to long ago but it has $30k and wonder if I should covert if to a Roth IRA. I opened a ROTH IRA through Vanguard a few years ago and contributed $5k in 2013. We are in the process of preparing our taxes with our tax accountant and will soon find our our AGI. A little worried that our AGI is above the income limits for a Roth, if so, can I transfer the Roth contributions into our kids 529 plan before April 15? Going forward, should we contribute to the standard IRA and have it automatically roll over into a Roth? Are we supposed to contribute to the 529 from post tax or pre tax income?  I know- lots of novice questions! After years of working hard but earning much much lower HHI, we finally hit $200k and are able to save more aggressively for kids college and retirement. We don't have any debt - just 1 joint family credit card we pay off every month and the mortgage. Help me with the financial strategy - it's all new to us.  [/quote]

"Maxing" the 401k means putting in the most you are allowed - 17,500/year for most. I would do that before worrying about IRAs. Maxing your and your spouses traditional 401k would probably lower your agi to the point that you could contribute to Roth IRAs, if you are financially prepared to go from saving 8k to 46k/year (17,500x2 401ks, 5,500x2 IRAS)

I would not do a backdoor Roth with your existing IRA unless you really feel like paying 10k in tax and expect your income in retirement to be higher than it is now, or expect tax rates to increase significantly.  
 
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