I have just started a part time job that will toss me above the state AGI limit that will cost me $2000 in state income taxes (its a pension income exemption). This past year I put enough in a 529 plan to avoid the AGI limit, but that will not work this year. The employer has 403b and 457b plans available that I can use to get under the number. Here is my question. The part time income is $30k. Would you put just enough (will be about $10k this year) to capture the credit, or just defer all the $25k (I want to show $5k income so I can contribute to my yearly Roth IRA)? My tax bracket is comfortably in the 24% tax bracket with a pension, so deferring will not reduce tax load down the road when it had to be withdrawn. I guess I am asking would you go ahead and take the tax hit now, or defer it even though there will be no tax advantage in the future? I have no current,intermediate, or even any long term need yet for any of this money and I just plan on adding it to my stash. I am aware that at age 48, I would not be able to touch it until after age 59.5 which is fine by me.
I do not have any pretax investment money, and the last thing I want is another opened up piddly $ account, but I assume I could eventually roll all of this money into my Vanguard account as an IRA? Any thoughts would be appreciated, and yes I am obsessed with making sure I get that $2000 tax refund!