ROTH IRA Phaseout for Joint filers
I can’t seem to find an answer to what I thought would be a simple question. Let’s assume that I have a joint return with an MAGI in the exact middle of the phaseout zone. Assume they are over 50. This would give them a ROTH limit of $6,000 for the HOUSEHOLD. I know I can $3,000 for each of them, but am I allowed to treat this as a household limit and open ONE ROTH for ONE spouse, (thus avoiding a second custodial fee and the hassle of a second small account) for the full $6,000? I seem to remember this being OK.
Any help on this and any supporting references would be GREATLY appreciated. Thanks.
John K Bacci
Permalink Submitted by Alan Spross on Wed, 2009-04-01 23:11
John,
While the income used to determine the contribution limit is joint income, the limit that results is not a household limit, but an individual limit that applies separately to each spouse. Therefore, one spouse cannot exceed their individual dollar limit if the other spouse does not contribute. This is the result you get from using worksheet 2-2 on p 64 of Pub 590. No where in this worksheet is there a line dealing with what the other spouse did or did not contribute. Therefore, in your example, the Roth maximum contribution potential for each spouse is 3,000. If a spouse were under 50, it would be 2,500 for that spouse.
Permalink Submitted by John Bacci on Thu, 2009-04-02 20:17
Thanks for the reply. I felt that the 590 was kind of silent on the issue, although you’re right in that it does calculate the individual, and not a household limit. I recall back in the days of the old $250 spousal IRA that even though the spousal IRA amount was only $250, you could split up the combined limit of $2,250 any way that you wanted, as long as neither filer exceeded the $2,000 limit. I know I’m dating myself with that reference, but that is where I’m coming from here. I’ve called the IRS, and not surprisingly gotten BOTH answers to this question. I guess that’s not surprising. I was hoping that somewhere out there would be some specific language on this, but I know exactly where you’re coming from with your interpretation.
Thanks so much for the helpful reply