Wife does not work

[Guest akahome]

I am looking for an answer to a question regarding contributions for my wife.

I make an income and my wife does not. Can we still contribute $4,000 to a fund? Or by her not working limit it to only $2,000?

Thanks in advance for any help

Andy

[John G]

The answer is yes, it could be 4,000 or even more.... and here is the way B Picker described eligibility at the www.Rothira.com site:

"In order to qualify, a taxpayer must have earned income, at least in the amount of the Roth IRA contribution. For married couples, either spouse can have the earned income, so that a spouse with no earned income could still make a Roth IRA contribution, as long as the other spouse has earned income. There is also a maximum income cap for taxpayers to be eligible to make a Roth IRA contribution. For married taxpayers filing a joint return, the ability to fund the Roth IRA starts to phase out at $150K of modified adjusted gross income (MAGI), and disappears completely at $160K. For single taxpayers, the ability to fund the Roth IRA starts to phase out at $95K of MAGI and disappears completely at $110K. For married taxpayers filing separately, the phase out starts at $0 and ends at $10K."

The earned income must be equal or exceed the IRA contribution.

The current max contribution for each spouse is $2,000 , but that ceiling will move up .... another quote from the rothira.com site:

"President Bush signed into law on 6/7/01 the tax bill that Congress passed on 5/26/01. The new law includes major pension changes. Provisions include phased-in contribution limits for IRAs and Roth IRAs: $3,000 in 2002, $4,000 in 2005, $5,000 in 2008 with limits indexed in future years. IRA catch-up provisions will increase those limits for those 50 and older by $500 in 2002 and by $1,000 starting in 2006. "

Hope this helps. Note age 50+ catchup provisions!