retirement

Who Can Contribute to a Roth IRA?

Calculating “modified adjusted gross income” to see if you qualify is a little tricky.

I am trying to estimate my modified adjusted gross income for 2013 to find out whether I can contribute to a Roth IRA for 2013. I haven’t filed my taxes yet, so I’m not sure what my AGI is. How do I calculate whether I qualify?

The calculations are complex, so you might want to tackle your tax return before you decide to contribute. The deadline to open or contribute to a Roth for 2013 is April 15--the same day your tax return is due.

To calculate “modified adjusted gross income” for purposes of Roth IRA eligibility, take the adjusted gross income from the bottom of page 1 of Form 1040 for 2013, then subtract any amounts you converted or rolled over from a qualified retirement plan to a Roth IRA, then add back any deductions for contributions you made to a traditional IRA. Also add back any deductions for interest on student loans and for tuition and fees, exclusions of qualified bond interest, and a few other deductions. See Worksheet 2-1 in IRS Publication 590, “Individual Retirement Arrangements,” for a full list. (Incidentally, the definition of “modified adjusted gross income” is slightly different for other tax breaks, such as the subsidy to help pay health insurance premiums on the exchanges.)

You can contribute up to $5,500 to a Roth IRA for 2013 or 2014, or $6,500 if you’re 50 or older. The amount you can contribute starts to phase out if your modified adjusted gross income for 2013 was more than $112,000 if you’re single or $178,000 if married filing jointly. See Worksheet 2-2 in IRS Publication 590 for help with the calculations. The income limits are slightly higher for 2014 contributions (see my column for the specifics). See Undoing a Roth IRA for information about your options if you discover your income crossed the limits after contributing to a Roth.

And if you’re married and your joint income falls within the Roth IRA limits, your spouse can contribute to a Roth IRA, too -- even if he or she isn’t working -- as long as one of you has earned income from a job. See Often Overlooked Opportunities to Save in a Roth IRA for more information about spousal IRA rules.

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