How can I contribute to my Roth IRA if my husband and I will be over the income limit?

by Timothy C. Hilbert, CPA | Mar 13, 2018
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I will be getting married this year. Together, my husband and I will be over the income limit for me to contribute to a Roth IRA. We do not plan to file taxes jointly because my student loan payments are income based. How can I still contribute money to my Roth IRA in this situation?

The rules are pretty clear. If you file married filing separately, but lived together during the year and your adjusted gross income is greater than $10,000, you are precluded from making a direct Roth contribution.

The only option you may have is to first make a nondeductible contribution to a regular IRA account and then convert that contribution to a Roth IRA account.

Be careful here. This option works well if you have no other pretax money in an IRA account (or after-tax contribution with significant earnings), as the Roth conversion produces no taxable income unless there is time lapse from the nondeductible contribution to the conversion, in which case any income during that time is taxable.

If you do have other traditional IRA accounts, you must prorate the conversion. The conversion ratio will cause an amount that includes the total of all pretax IRA contributions plus earnings to total IRA accounts (pretax and the aforementioned nondeductible amounts) to be taxable in the year of conversion. The conversion is not subject to early distribution penalties, but it is reportable income and is subject to income tax.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Timothy C. Hilbert, CPA, is a director of audit and accounting and professional services industry group leader with Kreischer Miller in Horsham, Pa.

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The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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