Author Topic: Married filing jointly IRA contributions  (Read 1843 times)

R S

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Married filing jointly IRA contributions
« on: March 13, 2018, 01:43:12 PM »
I have a question about IRA contribution limits.   We are recently married and file jointly.   I have an IRA and she has a Roth IRA.  So can we split up the $11,000 limit any way we'd like?     Say  $10,000 in the IRA and $1,000 in the Roth?      I've read on the forums that tax deferred should be the focus for FIRE candidates.   How would you split up the yearly contribution?

dandarc

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Re: Married filing jointly IRA contributions
« Reply #1 on: March 13, 2018, 01:52:14 PM »
IRA = Individual Retirement Arrangement.

You don't have a combined $11,000 contribution limit.  You each have a $5,500 limit.  Each of you may split that between traditional and Roth however you like, taking into consideration the income limits for deductions and Roth contributions.

You haven't provided any information that can be used to give advice regarding whether and how you might contribute to IRAs - it is an individual decision.

R S

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Re: Married filing jointly IRA contributions
« Reply #2 on: March 13, 2018, 02:06:18 PM »
Ok,  so we each have a $5500 limit.   So if we wanted to distribute more to an IRA,  we would have to open a second IRA under her name?

braje

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Re: Married filing jointly IRA contributions
« Reply #3 on: March 13, 2018, 02:13:17 PM »
The Max across both Traditional and Roth is 5,500 per year, unless you are over 50yo then 6,500 per year.

yachi

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Re: Married filing jointly IRA contributions
« Reply #4 on: March 13, 2018, 02:14:41 PM »
Yes, you can't take your spouses contributions in your account.  It's $5,500 each individual person as long as that person has earned income.  The benefit of being married is your spouse can put money into his/her IRA based on your earned income. 

Now if you want it in a Traditional IRA instead of a Roth IRA, just have your spouse open his/her own Traditional IRA.  You may have as many IRA accounts as  you need, but can only put in $5,500 total for each person.

His Traditional IRA: $5,500

Her Roth IRA: $1,000
Her Traditional IRA $4,500

MDM

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Re: Married filing jointly IRA contributions
« Reply #5 on: March 13, 2018, 02:15:02 PM »
Ok,  so we each have a $5500 limit.   So if we wanted to distribute more to an IRA,  we would have to open a second IRA under her name?
Yes, and it is not uncommon for a person to have both a tIRA and a Roth IRA.

See Backdoor Roth IRA - Bogleheads in case your income makes that of interest.

neo von retorch

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Re: Married filing jointly IRA contributions
« Reply #6 on: March 13, 2018, 02:15:52 PM »
If you're asking for the decision between Traditional and Roth IRA contributions, the logic goes something like this:

 - What's your marginal tax rate now?
 - Assuming the tax structure stays the same, what will your retirement expenses require you to take out of your IRA each year, and what will the taxes be on that?

If the taxes are higher now, put your money in the Traditional. If your taxes will be higher because of high expenses in retirement, put the money in Roth.

There's much more nuance to it than that, but that's a place to start.

Since you're married filing jointly, I think your overall limits would be the same. Whether you've exceed Traditional IRA limits for yourself and/or your wife depends on your overall income picture. (I think it's based on AGI.) Without that, the questions can't be answered. Additionally, what you "have" as far as accounts does not determine where your money should go. You can each have Traditional and Roth IRAs. You can even have multiple accounts of each type. But when you file your taxes, you need to follow the IRS limits for how much you've contributed in each tax year to each type of account.

R S

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Re: Married filing jointly IRA contributions
« Reply #7 on: March 13, 2018, 02:42:11 PM »
Yes, you can't take your spouses contributions in your account.  It's $5,500 each individual person as long as that person has earned income.  The benefit of being married is your spouse can put money into his/her IRA based on your earned income. 

Now if you want it in a Traditional IRA instead of a Roth IRA, just have your spouse open his/her own Traditional IRA.  You may have as many IRA accounts as  you need, but can only put in $5,500 total for each person.

His Traditional IRA: $5,500

Her Roth IRA: $1,000
Her Traditional IRA $4,500

Thank you.  Just the info I was looking for.

We are under the income limit so we are still eligible for fully deductible IRAs. 

I'm a very small business owner <5 employees and am doing some thinking on the best way to maximize savings.   I've been considering starting a SEP IRA or Simple IRA but am not sure at this point.    My wife is a teacher and has a pension through the state,  so she is actually only eligible for a Roth IRA from what I understand.  (Our joint income is around 160k)

simonsez

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Re: Married filing jointly IRA contributions
« Reply #8 on: March 15, 2018, 09:37:32 AM »
My wife is a teacher and has a pension through the state,  so she is actually only eligible for a Roth IRA from what I understand.
My wife is a teacher and has a pension through the state.  She has an IRA as well.  There aren't any career-specific restrictions that I'm aware of in terms of eligibility for a tIRA/Roth IRA.  There are the contribution limits, income limits, and withdrawal/retirement rules but I've never heard of anything related to your career.

dandarc

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Re: Married filing jointly IRA contributions
« Reply #9 on: March 15, 2018, 09:54:55 AM »
My wife is a teacher and has a pension through the state,  so she is actually only eligible for a Roth IRA from what I understand.
My wife is a teacher and has a pension through the state.  She has an IRA as well.  There aren't any career-specific restrictions that I'm aware of in terms of eligibility for a tIRA/Roth IRA.  There are the contribution limits, income limits, and withdrawal/retirement rules but I've never heard of anything related to your career.
You cropped the key point:
Quote
(Our joint income is around 160k)

At that level of income, the wife probably cannot deduct a tIRA contribution.  Kind of confusing, because OP said above that "we're under the limit for fully deducting tIRAs", but I think that only applies to OP, since wife has retirement at work and OP does not.

ETA a link to the limits.  OP is MFJ.  OP does not have retirement at work, but OP's wife does. https://www.irs.gov/retirement-plans/ira-deduction-limits

simonsez

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Re: Married filing jointly IRA contributions
« Reply #10 on: March 15, 2018, 12:52:19 PM »
You cropped the key point:
Quote
(Our joint income is around 160k)
Kinda, I just wanted to be clear that IRAs have nothing to do with career choice or defined benefit plans.

Yes, 160k is very relevant to the ability to contribute and deduct taxable money in a tIRA but 0% related to the fact that OP's wife is a teacher or has a pension through the state.

dandarc

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Re: Married filing jointly IRA contributions
« Reply #11 on: March 15, 2018, 01:10:39 PM »
You cropped the key point:
Quote
(Our joint income is around 160k)
Kinda, I just wanted to be clear that IRAs have nothing to do with career choice or defined benefit plans.

Yes, 160k is very relevant to the ability to contribute and deduct taxable money in a tIRA but 0% related to the fact that OP's wife is a teacher or has a pension through the state.

Sort of does matter that she has a pension - "are you covered by a retirement plan at work?" drives the deductibility limits - very different limits depending on how you answer that question.  But as you say, the type of job doesn't matter.

simonsez

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Re: Married filing jointly IRA contributions
« Reply #12 on: March 15, 2018, 01:50:40 PM »
You cropped the key point:
Quote
(Our joint income is around 160k)
Kinda, I just wanted to be clear that IRAs have nothing to do with career choice or defined benefit plans.

Yes, 160k is very relevant to the ability to contribute and deduct taxable money in a tIRA but 0% related to the fact that OP's wife is a teacher or has a pension through the state.

Sort of does matter that she has a pension - "are you covered by a retirement plan at work?" drives the deductibility limits - very different limits depending on how you answer that question.  But as you say, the type of job doesn't matter.
Ah, touche - totally forgot about that!  Thanks