Author Topic: Spouse job and IRA/Roth IRA contribution  (Read 1092 times)

jamesbond007

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Spouse job and IRA/Roth IRA contribution
« on: December 13, 2017, 11:36:02 AM »
Last year(Tax Year 2016) we filed MFJ and DW was a SAHM. My income was high enough that we both could not contribute to Roth IRA. So I did a backdoor for the both of us.


This year (Tax Year 2017) DW worked for about 4 months and earned about $4000 of which, 2 months was as a 1099 contractor (Taxes are still due), and the remaining 2 months as a W-2 employee. She had no retirement plan at work. My income has increased about 3% YoY. This puts me in the same boat as last year so I initiated a transfer to my tIRA and will do backdoor Roth sometime next week.


Coming to DW, can she contribute to tIRA and claim full deduction? The IRS guidelines are a bit confusing. Can she contribute directly to Roth avoiding the backdoor business?


Based on the info here: https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work she might be able to get a partial deduction for tIRA.


And based on this info: she might be able to contribute a reduced amount to Roth directly: https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2017


I am thinking I just contribute the $5500 to tIRA and convert the whole amount into Roth to avoid all the partial amount nuisance. Am I thinking straight?


PS: We don't have any outstanding tIRAs. So, I assume a big tax liability is not an issue. Also, since I will be converting just a week after I contribute to tIRA, the gains are $0.

dandarc

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #1 on: December 13, 2017, 11:47:51 AM »
#1 - you pretty much have to file jointly if you're married and living together.

#2 - Do you have a retirement plan at work?  I'm guessing yes because the guidance from the IRS is pretty clear on whether or not you can deduct a TIRA if you also don't have retirement at work.

#3 - If the answer to #2 is yes, then is your MAGI for 2017 under $186K ($196K for partial)?  If yes, then she can deduct her tIRA contribution.  If no, then she can't and Backdoor Roth IRA is the play.

Without specific numbers, it reads like your MAGI will be between $186K and $196K.  Or is that your combined gross?  Because around here, your MAGI can be quite a bit less than your gross.  401K, health insurance, HSA / FSA, and some other things you might be doing through payroll would all lower your MAGI.

jamesbond007

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #2 on: December 13, 2017, 01:00:47 PM »
#1 - you pretty much have to file jointly if you're married and living together.

#2 - Do you have a retirement plan at work?  I'm guessing yes because the guidance from the IRS is pretty clear on whether or not you can deduct a TIRA if you also don't have retirement at work.

#3 - If the answer to #2 is yes, then is your MAGI for 2017 under $186K ($196K for partial)?  If yes, then she can deduct her tIRA contribution.  If no, then she can't and Backdoor Roth IRA is the play.

Without specific numbers, it reads like your MAGI will be between $186K and $196K.  Or is that your combined gross?  Because around here, your MAGI can be quite a bit less than your gross.  401K, health insurance, HSA / FSA, and some other things you might be doing through payroll would all lower your MAGI.

My salary is $180,000 and I get a 20% bonus. Plus this year, I got another 20K as sign-on bonus. So it is safe to assume that my MAGI is over $186K. Plus I maxed out my 401K.

It looks like I will just do a backdoor roth for my DW like last year.

dandarc

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #3 on: December 13, 2017, 01:03:38 PM »
What do you do?  Asking for a friend . . .

terran

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #4 on: December 13, 2017, 01:17:28 PM »
What do you do?  Asking for a friend . . .

Isn't it obvious? International Man of Mystery.

jamesbond007

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #5 on: December 13, 2017, 01:44:02 PM »
Was it reference to something that I don't understand? Or were you being sarcastic?

dandarc

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #6 on: December 13, 2017, 01:46:43 PM »
I'd like to make $200K+ per year, and would like to know how.

terran is referring to your user name

jamesbond007

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Re: Spouse job and IRA/Roth IRA contribution
« Reply #7 on: December 13, 2017, 07:55:29 PM »
I'd like to make $200K+ per year, and would like to know how.

terran is referring to your user name

haha ok. What do I do? I am a Data Scientist in one of those large tech companies.