Author Topic: Married Filing Separately and a Roth IRA  (Read 2508 times)

andy85

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Married Filing Separately and a Roth IRA
« on: January 19, 2015, 12:04:28 PM »
So a buddy of mine is married and they are filing separately (MFS) for tax reasons due to crazy high student loans or something...not sure..but that isnt the main point.

Since they are MFS, he is unable to contribute to this Roth IRA I believe.

Is there a way around this? Would it be possible, if it is offered by his company, to do an in-service rollover from his traditional 401(k) into a Roth IRA? I doubt he would do it...but I guess i'm just curious if there is a way around contributing to a Roth IRA while filing taxes MFS....just thinking out loud here...

Cheddar Stacker

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Re: Married Filing Separately and a Roth IRA
« Reply #1 on: January 19, 2015, 12:39:04 PM »
Your buddy is also screwing himself out of deducting the SL interest, which is also not allowed when MFS. I've advised against doing this for the exact same 2 reasons, and people were doing it for the exact same reasons (i.e.-not wanting to repay high SL balances via IBR).

A lot of abbreviations there, sorry about that.

I'm not aware of any work-arounds other than filing jointly or getting divorced. What you mentioned sounds easier though.

andy85

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Re: Married Filing Separately and a Roth IRA
« Reply #2 on: January 19, 2015, 12:48:07 PM »
Your buddy is also screwing himself out of deducting the SL interest, which is also not allowed when MFS. I've advised against doing this for the exact same 2 reasons, and people were doing it for the exact same reasons (i.e.-not wanting to repay high SL balances via IBR).

A lot of abbreviations there, sorry about that.

I'm not aware of any work-arounds other than filing jointly or getting divorced. What you mentioned sounds easier though.
not sure if it makes a difference but the bulk of the student loans are his wife's who finished med school about a year and a half ago....so i assume they are massive loans. perhaps that is why they are doing it...not 100% sure. but thanks for the reply...i was just curious.

thingamabobs

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Re: Married Filing Separately and a Roth IRA
« Reply #3 on: January 19, 2015, 01:44:35 PM »
So they filed MFS for student loans to get the lower monthly repayment? Like PP said, they are losing out on the tax deduction unless they wouldn't qualify for it anyway if they filed jointly.

Cheddar Stacker

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Re: Married Filing Separately and a Roth IRA
« Reply #4 on: January 19, 2015, 02:00:22 PM »
The med school part makes me think they can't deduct it anyway, at least not long-term. The AGI limit for deduction is around $155K-160K for MFJ. Most doctors will get well beyond that.

thingamabobs

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Re: Married Filing Separately and a Roth IRA
« Reply #5 on: January 19, 2015, 03:11:01 PM »
she just got out of med school, residency income is around 50K gross so definitely could get at least 3 years of deductions.

mlipps

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Re: Married Filing Separately and a Roth IRA
« Reply #6 on: January 19, 2015, 03:12:09 PM »
I was thinking you could still do back door Roth with MFS. I would not bet my life on that or anything, but worth googling.

Doubleh

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Re: Married Filing Separately and a Roth IRA
« Reply #7 on: January 19, 2015, 04:17:49 PM »
My wife files as mfs since we live in UK and I am not a US taxpayer. We recently asked our (expat specialist) CPA this question and his answer was that she can't contribute to Roth but can make non deductible contributions to a trad ira (since she has taxable income above the foreign income exclusion) and then do a backdoor Roth conversion.

Just done this for 2014 contribution allowance, should find out shortly if it has worked!