As you continue your career at Lockheed Marin you are hopefully saving and investing for your retirement. One way to save is by using a Roth IRA, which provides tax-free growth; however, whether or not you are eligible to save into this type of account will depend on your income. Keep reading to find out more.
In order to fund a Roth IRA, you must first have earned taxable income. So, if you are retired from Lockheed Martin and collecting your pension and Social Security only, then this blog will not apply to you. But if you have other income such as income from a part-time job, self-employment, or a farm, then this information also pertains to you.
Once you have earned income, you must then have that income be within a certain range. This range is more commonly known as the Phase-out. Just as it sounds, your eligibility to contribute to a Roth IRA will be phased out based on your income. Which income you may ask: wages, taxable income, adjusted gross income, or what? That is a good question, and it confuses many people.
The phase-out is based on your modified adjusted gross income (MAGI) as well as your tax filing status. Your MAGI is calculated by taking your adjusted gross income (AGI) from your tax return and adding back certain deductions, like student loan interest, self-employment taxes, and higher education expenses.
In 2022, per the IRS chart below, an individual will be able to make full Roth IRA contributions if income is less than $129,000, and partial contributions up to the maximum MAGI of $144,000. For married couples filing jointly, the limits will be $204,000 and $214,000, respectively.
| If your filing status is… | And your modified AGI is… | Then you can contribute… |
|---|---|---|
| married filing jointly or qualifying widow(er) | < $204,000 | up to the limit |
| married filing jointly or qualifying widow(er) | > $204,000 but < $214,000 | a reduced amount |
| married filing jointly or qualifying widow(er) | > $214,000 | zero |
| married filing separately and you lived with your spouse at any time during the year | < $10,000 | a reduced amount |
| married filing separately and you lived with your spouse at any time during the year |
> $10,000 | zero |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year | < $129,000 | up to the limit |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year | > $129,000 but < $144,000 | a reduced amount |
| single, head of household, or married filing separately and you did not live with your spouse at any time during the year | > $144,000 | zero |
Taxes are confusing and having an expert financial planner to help you navigate these waters is something we would highly recommend. We have Lockheed Martin specialists standing by and ready to assist. If you’d like to learn more, give us a call today at 817-210-3444 or click HERE to book a complimentary consultation.
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Be sure and check back next week for more incredibly valuable information. Cheers!
Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.
This blog is being provided and sponsored by Strittmatter Wealth Management Group, LLC. Lockheed Martin and its subsidiaries do not endorse, recommend, or make representations with respect to any information, advice, services, or products discussed in this blog.
Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.
Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.
SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.
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