Simple IRA and Roth IRA - What are my contribution limits if I have both?

[toga62]

Hi all,

I have a Simple IRA through my employer which provides me an annual $12,000 contribution limit. From my research, this account works similarly to a Traditional IRA.

I have a lot of excess income and am interesting in also opening a Roth IRA.

I am wondering what the contribution limits are when I have both accounts?
I know that if you have both a Traditional IRA and Roth IRA you cannot exceed the $5,500 limit combined between both accounts (bummer).

But I read on fool.com that this limitation does not apply to a Simple IRA + Roth IRA combination! (http://www.fool.com/money/allaboutiras/allaboutiras04.htm) - read the ordered list right before the first example.

Is this true?  Would this mean I could max out a Simple IRA at 12K a year while also maxing out a Roth IRA at 5.5K a year?  I'm hoping to get confirmation, I've not found much information regarding this subject in my searches.

[thepokercab]

Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional.  However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, you may not be able to get a traditional IRA deduction- all depends on your income situation.   

Personally, i max out my SIMPLE IRA, and fully fund a Roth IRA. 

[toga62]

Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional.  However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, you may not be able to get a traditional IRA deduction- all depends on your income situation.   

Personally, i max out my SIMPLE IRA, and fully fund a Roth IRA.

Thanks! that is what I think I will do as well.  The rest I will put into a regular taxable investment account.

[toga62]

I have a follow up question;

If I open a Roth IRA tomorrow and put in 5,500 before I submit my taxes can I mark it as contributions for 2013 so I can contribute another 5,500 for 2014?

[Bruno]

I have a follow up question;

If I open a Roth IRA tomorrow and put in 5,500 before I submit my taxes can I mark it as contributions for 2013 so I can contribute another 5,500 for 2014?

Yes you can do both. You can contribute right now for 2014 or at any time until the tax filing deadline for 2014 (Apr. 15 2015).
You also have until Apr. 15 2014 to contribute for 2013, even if you file your tax return earlier.

[toga62]

I have a follow up question;

If I open a Roth IRA tomorrow and put in 5,500 before I submit my taxes can I mark it as contributions for 2013 so I can contribute another 5,500 for 2014?

Yes you can do both. You can contribute right now for 2014 or at any time until the tax filing deadline for 2014 (Apr. 15 2015).
You also have until Apr. 15 2014 to contribute for 2013, even if you file your tax return earlier.

Awesome, then is there a specific form that needs to be filled out?  How do they determine what year a contribution is made for?

[Jack]

I have a follow up question;

If I open a Roth IRA tomorrow and put in 5,500 before I submit my taxes can I mark it as contributions for 2013 so I can contribute another 5,500 for 2014?

Yes you can do both. You can contribute right now for 2014 or at any time until the tax filing deadline for 2014 (Apr. 15 2015).
You also have until Apr. 15 2014 to contribute for 2013, even if you file your tax return earlier.

Awesome, then is there a specific form that needs to be filled out?  How do they determine what year a contribution is made for?

For Vanguard, you can select which contribution year you want at the same time you put in the buy order on the website. Or, if you previously bought as a 2014 contribution, you just go to your transaction history, click the date of the contribution you want to change, click "edit contribution year" and swap it from 2014 to 2013.