Roth IRA Eligibility – married filing separately – ‘marriage penalty’

Submitted by Donald Marchand on Wed, 2015-01-14 02:55

I recently saw the 2012 and 2013 Roth IRA Eligibility information. My spouse and I filed our taxes in both years as ‘married filing separately’. I lived with my spouse during the year. I contributed to a Roth IRA in both years. Modified AGI was > $10,000. Based on the Roth IRA eligibility rules I shouldn’t have contributed to the Roth IRA.
This seems like a marriage penalty scenario – the IRS is expecting you to file your taxes as ‘married filing jointly’ and then you likely can contribute.
It has been suggested to me that we file amended returns and do a ‘married filing jointly’ version – then the Roth IRA contribution would be okay. Otherwise I have to withdraw the money and pay the cumulative 6% penalty for each year the money remains in the Roth IRA.



Submitted by Alan - IRA critic on Wed, 2015-01-14 04:44

  • Maybe more of a filing status penalty than a marriage penalty. It is similar to taxation of SS income for MFS filers. Your know your two options, so you will have to determine which of the two is best. If you remove the Roth excess amounts, the earnings stay in the Roth and you do not incur another excise tax until 12/31/2015, so no particular rush to take the distributions. May as well let the contributions earn more until close to year end.
  • If you do not have a non Roth IRA balance, you can get around this problem by making non deductible TIRA contributions and then converting them tax free. Same as the back door Roth method and there is no income limit for conversions when filing separately.

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