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put (small) income into Roth or spend it ?
I think I know the answer to this question, but would appreciate
insight here.
I am RE'ed, but occasionally have the opportunity to make a little
money (perhaps $5-10K) doing a consulting job. When this occurs,
I have compensation income and can therefore put up to $5K (or
whatever I earn, if less) into a Roth. Clearly it makes sense to
do this, rather then spending the money for expenses, right ?
The only other possiblity would be a deductible TIRA contribution,
but since my tax rate should be quite low, that is probably silly.
But contributing to neither makes no sense whatsoever (?).
On a similar note, in deciding whether to do $5K worth of consulting
(or not, and goof off more), doesn't it make sense to consider that
this $5K is worth a lot more to me than any other $5K, because it'll
allow a Roth contribution that otherwise couldn't happen (because
no "compensation income") and thus the growth/earnings of this
$5K will be tax-free in perpetuity ? Put another way, by choosing to
do the work and earn the $5K, I'm effectively increasing my portfolio
value (this year) by $5K *and* it's the more-valuable Roth portion of
my portfolio (relative to what my portfolio would be worth if I did no
work and had to pull $5K more out of it for expenses).
Hope this makes sense, thanks !
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