Ask Kim


Calculate Your Eligibility for a Roth IRA

Kimberly Lankford

Here's how to figure out if you qualify to contribute to this tax-advantaged retirement savings vehicle.



My wife and I gross more than $190,000 in income. But after 401(k) contributions and other adjustments, I think we are below the max of $160,000 to contribute to a Roth IRA. How do I know for sure? Is there a line on my 1040 that tells me?The key figure for Roth IRA eligibility is your "modified adjusted gross income," which is your adjusted gross income -- the last line on the first page of your 1040 -- with a few adjustments. Add back to your income any deduction you had taken for IRA contributions, student loan interest, bond interest used for college costs, employer-provided adoption benefits and a few others (see IRS Publication 590 Individual Retirement Arrangements for a full list and worksheet). Subtract any income that came from converting a traditional IRA to a Roth.

And the AGI itself doesn't include money that had already been deducted from your paychecks, such as pretax money you contributed to a 401(k) or flexible-spending account. In your case, it seems to make the difference. Married couples filing jointly can contribute up to $5,000 each to a Roth IRA in 2008 (or $6,000 if 50 or older) as long as their modified adjusted gross income is less than $159,000. You'll be able to make a partial contribution if your income is less than $169,000 (Publication 590 includes a worksheet to help with these calculations, too).

Got a question? Ask Kim at askkim@kiplinger.com.




You can get valuable updates like Ask Kim from Kiplinger sent directly to your e-mail. Simply enter your e-mail address and click "sign up."

More Sponsored Links


DISCUSS

Permission to post your comment is assumed when you submit it. The name you provide will be used to identify your post, and NOT your e-mail address. We reserve the right to excerpt or edit any posted comments for clarity, appropriateness, civility, and relevance to the topic.
View our full privacy policy


Advertisement

Market Update

Advertisement

Featured Videos From Kiplinger