IRAs

Marriage and Roth IRA Contributions

Newlyweds can suddenly become ineligible for Roth IRAs once their incomes are combined, although couples may still invest in them indirectly.

Question: I'm getting married next month, and when we add up my income and my wife's, we'll earn more than the limit to contribute to a Roth IRA. But I'm below the income limit now, so can I contribute to a Roth before the wedding?

Answer: No. If you're married as of December 31, you're considered to be married for the full year for tax purposes -- no matter what the wedding date. That means you'll file your taxes as married – either jointly or separately -- for 2017. You'll also be subject to the joint income limits for Roth contributions for the full year. If you’re married filing jointly and your combined adjusted gross income is less than $186,000, then you both can contribute the full $5,500 to a Roth for the year (or $6,500 if you're age 50 or older). Once your joint income reaches $186,000 to $196,000, then you both can make reduced contributions. You can't contribute to a Roth at all if your joint income is more than $196,000. See IRS Publication 590-A, Individual Retirement Arrangements, for a worksheet to calculate your modified adjusted gross income for the Roth limits.

And you can't get around the Roth limits by filing taxes separately. The income limit is just $10,000 for married people filing separately if you lived with your spouse at any time during the year.

If you earn too much to contribute to a Roth, you can both put money instead in nondeductible traditional IRAs for 2017 and then convert them to Roths. But you could be taxed on a portion of the rollover if you have any other money in traditional IRAs (the tax-free portion of the conversion is based on the ratio of your nondeductible contributions to the total balance in all of your traditional IRAs). See Converting Nondeductible IRA Contributions to a Roth for more information.

If you had already contributed to the Roth for the year and now your income disqualifies you, you would still have time to undo the contribution. Otherwise, you would have to pay a 6% penalty on excess contributions. You could take the contributions (and any earnings on them) out of the Roth before the tax-filing deadline, or you could have your IRA administrator switch your 2017 Roth contributions (plus all earnings on that money) into a traditional IRA. If you made contributions to the Roth in earlier years, the administrator should calculate how much of the earnings in the account should be attributed to the 2017 contribution. You can keep the money from previous years' contributions in the account.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
10 States With the Highest Sales Taxes
Tax Breaks

10 States With the Highest Sales Taxes

Before you embark on a shopping spree in any of the 10 worst states for sales taxes, make extra room in your budget.
June 16, 2021
12 Housing Stocks to Ride the Red-Hot Market
investing

12 Housing Stocks to Ride the Red-Hot Market

The U.S. has a housing shortage and a love affair with home improvement, both of which could create tailwinds for this group of housing stocks.
June 8, 2021

Recommended

Why You Need a Roth IRA
Roth IRAs

Why You Need a Roth IRA

With this indispensable savings tool, your money grows tax-free, you can invest in almost anything and you get several cool perks.
June 14, 2021
Everything You Must Know About "Backdoor" Roth IRAs
Roth IRAs

Everything You Must Know About "Backdoor" Roth IRAs

If you earn too much to contribute directly to a Roth IRA, there are still ways to move funds to this type of an account.
June 14, 2021
How Teens Can Start Investing Through a Roth IRA
retirement

How Teens Can Start Investing Through a Roth IRA

By beginning to invest in a Roth IRA at an early age, today’s teens can become tomorrow’s millionaires.
June 14, 2021
Invest in a Roth 401(k) If You Can
401(k)s

Invest in a Roth 401(k) If You Can

Workers of all ages can benefit from stashing away after-tax money now in exchange for tax-free withdrawals in the future.
June 11, 2021