Thread: IRA Limits for Married Couple?

Originally Posted by coastalite

Does anyone know the rules for how much money a married couple (no kids) can contribute to other IRAs (if we max out on our 2015 TSP contributions @$18K - over 26 pay periods)? We're basically contributing approx $690 per pay period x 26 = approx $18K for 2015.

Here's the issue:

My spouse isn't working but we also each have a ROTH IRA (at Vanguard). My spouse also has an old rollover 401k from a previous employer (also at Vanguard in an IRA - but it's just sitting there).

Are we allowed to make contributions to our other IRAs at Vanguard if we max out on the $18K to our TSP for 2015 (under age 50)? Not sure if that makes sense. I tried to Google it, but can't seem to find the info. My spouse and I obviously don't know wtf we're doing, and sure could use some friendly advice. Thank you so much!!!

This might be interesting if spouse is not working:
found it at Can You Make a Roth IRA Contribution If You Have No Earned Income? | Finance - Zacks
Shared Spousal Compensation
"If you're married and file a joint return, you can still contribute to your Roth IRA if your spouse has extra compensation. "Extra" means the amount of compensation your spouse has minus any IRA contributions your spouse makes. For example, if your spouse has $50,000 of compensation and makes a $6,000 IRA contribution, that leaves $44,000 of compensation -- more than enough to make another full Roth IRA contribution for you. This special treatment only applies if you're married and file a joint return, however...."


However, it's always best to go to IRS website

As I understand it, the amount you contribute to a 401K (TSP) does not impinge on the amount you can contribute to a Roth IRA. That is different for a traditional IRA. The Roth IRA is only limited by your earnings and AGI. If you qualify for a Roth IRA, the amount you put in your TSP doesn't matter as long as it's all earned income. Your wife also qualifies for a spousal Roth IRA off of your earned income even if she didn't have any earned income of her own. That's what I did for my wife before she decided to go back to work.

Originally Posted by Cactus

As I understand it, the amount you contribute to a 401K (TSP) does not impinge on the amount you can contribute to a Roth IRA. That is different for a traditional IRA. The Roth IRA is only limited by your earnings and AGI. If you qualify for a Roth IRA, the amount you put in your TSP doesn't matter as long as it's all earned income. Your wife also qualifies for a spousal Roth IRA off of your earned income even if she didn't have any earned income of her own. That's what I did for my wife before she decided to go back to work.

how did you manage to do that?

Originally Posted by burrocrat

how did you manage to do that?

I guess I wasn't too clear about that. Since my wife didn't work outside the home we filed a joint return and the income is considered both of ours. She was able to open a Spousal Roth IRA and I gave her the money to put in to it. You want to download the IRS Publication 590 to get all the information on that.

I didn't have an IRA at the time, only my TSP. I set this up for my wife because she was concerned about not having a retirement account herself that she could contribute to and I was not doing well with my TSP. Now I make sure she maxes out her Roth IRA and the rest goes to my TSP. I'm still not that hot with my TSP IFTs and she does better than me so this makes sense for us.

no no no, i understand about saving and living frugally within your means and knowing tax laws. how did you manage to get her to go to work?

Originally Posted by burrocrat

no no no, i understand about saving and living frugally within your means and knowing tax laws. how did you manage to get her to go to work?

Well, there I have to man up and confess that she gave up on me providing enough retirement to live on. Those two crashes in the 2000's wiped out my retirement investments like everyone else's, but my attempts to make up for that proved less than comforting for her. I promised her I would not retire until we have enough to retire on, but she decided to go back to work now while she still had her health. It may be too late later.

Originally Posted by Cactus

Well, there I have to man up and confess that she gave up on me providing enough retirement to live on. Those two crashes in the 2000's wiped out my retirement investments like everyone else's, but my attempts to make up for that proved less than comforting for her. I promised her I would not retire until we have enough to retire on, but she decided to go back to work now while she still had her health. It may be too late later.

ahhh, teamwork then. you got it pretty good there man.

Great teamwork. Sounds like a great relationship. Congrats.

FS

Originally Posted by Maricar19

This might be interesting if spouse is not working:
found it at Can You Make a Roth IRA Contribution If You Have No Earned Income? | Finance - Zacks
Shared Spousal Compensation
"If you're married and file a joint return, you can still contribute to your Roth IRA if your spouse has extra compensation. "Extra" means the amount of compensation your spouse has minus any IRA contributions your spouse makes. For example, if your spouse has $50,000 of compensation and makes a $6,000 IRA contribution, that leaves $44,000 of compensation -- more than enough to make another full Roth IRA contribution for you. This special treatment only applies if you're married and file a joint return, however...."


However, it's always best to go to IRS website

Thanks for the info!

Originally Posted by Cactus

I guess I wasn't too clear about that. Since my wife didn't work outside the home we filed a joint return and the income is considered both of ours. She was able to open a Spousal Roth IRA and I gave her the money to put in to it. You want to download the IRS Publication 590 to get all the information on that.

I didn't have an IRA at the time, only my TSP. I set this up for my wife because she was concerned about not having a retirement account herself that she could contribute to and I was not doing well with my TSP. Now I make sure she maxes out her Roth IRA and the rest goes to my TSP. I'm still not that hot with my TSP IFTs and she does better than me so this makes sense for us.

Hmmmmmm, a spousal ROTH IRA? I didn't know there was such a thing.

My spouse has had her ROTH IRA set up for many years (while still working). We now have the means to max out the TSP and both of our ROTH IRAs with just one income. I just wanted to make sure we can do that without any penalties biting us. Thanks!

Originally Posted by Cactus

As I understand it, the amount you contribute to a 401K (TSP) does not impinge on the amount you can contribute to a Roth IRA. That is different for a traditional IRA. The Roth IRA is only limited by your earnings and AGI. If you qualify for a Roth IRA, the amount you put in your TSP doesn't matter as long as it's all earned income. Your wife also qualifies for a spousal Roth IRA off of your earned income even if she didn't have any earned income of her own. That's what I did for my wife before she decided to go back to work.

So, we can max out the TSP and both of our Vanguard ROTH IRAs on just one salary? We file married jointly and fall under the limit.

As I understand, I guess the only thing we can't fund is her 401k rollover that's now just sitting idle in a traditional IRA at Vanguard - because she's not working - so she cannot put pre-tax money into it because there's no earned paycheck to deduct it from, right? However, she can convert her rollover 401k IRA into her ROTH IRA (but would have to pay taxes on it).