Roth Contribution for mature individuals
Would an married indiviual who is in his late 70’s and goes back to work but earns under the maximum Roth contribution limit be allowed to give money to a Roth as long as he worked? Would his wife–regardless of age– who is NOT working also be able to contribute the spousal maximum (assuming they earn well over the contribution amount).
Permalink Submitted by Marvin Rotenberg on Fri, 2010-02-12 21:09
Yes you can cntribute to a Roth over age 70 1/2 if you have compensation. The income limits are still in effect for contributions. For married and filing joint the contribution statrs to phase out at $167,000 and is completely phased out @ $177,000.
The spouse contribution rules allow lower compensated, or no compensation, spouses to use their spouse’s compensation when determing their IRA contribution limit. The contribution for the higher compensated spouse is based on the regular IRA contribution rules and is not affected by the spousal IRA contribution rules. Thus, the contribution limit for such individual is the lesser of the individual’s annual IRA contribution limit, or 100% of that individual’s compensation. His spouse’s compensation is irrelevant.
Marvin
Permalink Submitted by Scott Cousino on Fri, 2010-03-05 20:51
Follow-up questions: 1) If the mature Roth contributors desire to withdraw assets contributed to the Roth are they still required to wait the 5 years for full withdrawal? 2) Is this the scenario where they can withdraw their contributions at any time over age 59 1/2 but must wait the 5 years to withdraw the gains?
Thanks!
Permalink Submitted by Alan Spross on Fri, 2010-03-05 21:07
1) They must wait 5 years from the year of their first Roth account for EARNINGS to be tax free. But their own regular OR conversion contribution amounts can be withdrawn tax and penalty free at any time. Earnings come out last, only after all contributions have been withdrawn.
2) Yes. But even those under 59.5 can withdraw their regular contributions without tax any time they wish. Conversions must wait 5 years for those under 59.5.
Permalink Submitted by Scott Cousino on Fri, 2010-03-05 21:18
Thanks Alan!!!