I’ve spent a lot of time thinking about how I will make my Roth IRA contribution for 2012.
If I had a good estimate of my income for 2012, I would just make the direct contribution right now (or with my first quarter bonus). My MAGI for the year could be anywhere between $77,000 and $121,000, assuming that I max out the traditional 401(k). It could even go higher than that since I don’t know what kind of annual bonus I’ll see with my performance review this year.
My first idea was to wait and see if my MAGI would be under the $110,000 limit and I would have a good idea of this by the time my third quarter bonus is paid out. But! I have no guarantee that I would be eligible at that point anyway and if I wasn’t eligible, I would just make a backdoor contribution.
So now I’m thinking that maybe I should just make the backdoor contribution with my first quarter bonus since there is a reasonable chance that I would end up needing to do that anyway. I had been planning on using my first quarter bonus to re-pay the taxable investments that I borrowed from to form my down payment, but instead, I could max out my Roth IRA via the backdoor with the first $5,000 I owed my taxable investments and set the remaining $354.89 aside in a savings account until I accumulate $3,000 that is earmarked for taxable investments.
Yes, I think this seems like a good plan. Last year, I maxed the Roth IRA out in April. This year, I’ll do it once the dust has settled after closing on the condo (so probably in early to mid February) and perhaps in 2013 I’ll do it earlier, as soon as I get my first quarter bonus.
Readers, what’s your plan to max out your Roth IRA for 2012?