Roth contributions/marrying mid-year

Submitted by Jason Frank on Thu, 2019-11-07 15:40

I’ve tried to find a definitive answer to this question but have been unsuccessful so far.
Example:
A single person qualifies to make Roth IRA contributions based on their income. They make a contribution to their Roth in January when they are single. Later in the year they get married, and now their spouse’s income makes them ineligible to make Roth contributions as a married couple. Is the January contribution disallowed since they ended the year married?

Thank you for any advice on this issue!



Submitted by David Mertz on Thu, 2019-11-07 17:08

“Is the January contribution disallowed since they ended the year married?”   Yes, the Roth IRA contribution becomes an excess contribution.  Your MAGI threshold for Roth IRA contributions is based on your filing status.  Your filing status is determined by your marital status on the last day of the year.  To avoid an excess contribution penalty, by the due date of your tax return (including extensions)  you would need to either obtain a return of the excess contribution or recharacterize the excess Roth IRA contribution to be a traditional IRA contribution instead.

Submitted by Jason Frank on Thu, 2019-11-07 20:25

Thank you for the clarification!

Submitted by Alan - IRA critic on Fri, 2019-11-08 04:15

If you recharacterize the excess contribution as a TIRA contribution (likely non deductible), if you have no other pre tax IRA balance you could convert back to Roth tax free. This is the so called “back door Roth” strategy.  If you DO have a pre tax TIRA balance, you might consider rolling into your employer plan before year end. That would allow your conversion to be non taxable.

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