AGI and Qualification Question (bear with a noob)

[Guest reddog]

Question (1)

If I am married and file separately it is my understanding that my personal AGI cannot exceed 110K to qualify for a Roth. Further, I belive that my spouse and I collectively cannot have more than 160K AGI. Is this true?

Also, can I still contribute in subsequent years to this Roth when my AGI goes beyond 110K or 160K w/ my spouse?

Question (2)

I should know this but don't. Can you have both a regular IRA and a Roth IRA?

Thank you so much for any help. I'm considering a reg. IRA conversion to a Roth and need help!

[Lori Friedman]

Question (1)

If you're a married but file a separate return, your Roth IRA contribution gets phased out at $10,000 of modified adjusted gross income (MAGI). The $110,000 MAGI limit is for a single person. The $160,000 MAGI limit applies if you and your spouse file a joint income tax return.

The MAGI determination is made on a year-by-year basis. It's not unusual for someone to qualify for a Roth IRA contribution in some years, yet not qualify in other years.

Question(2)

Yes, you can have both a traditional IRA and a Roth IRA. In fact, the law requires that Roth IRA assets be kept segregated from other IRA assets.

[Guest reddog]

Thanks, Lori. One more question for you. Can I max out my Roth if I stay below 150K AGI plus max out a separate regular IRA within the same year? Again thanks so much.

[John G]

I sure hope your married filing seperately is a hypothesis or your election. The Roth rules for married filing seperately are harsh.

Can you max out both a Roth and IRA? NO

The maximum allowed is for the combination of Roth and IRA.

You need to get a copy of IRS Publication 590 and read the various qualifications and restrictions for contributory IRA/Roths and Roth conversions.

You may also have options through your employer. If you are self employed, ask your accountant to explain some of the options you can take there.

If you find that you have a "excess income" (my associates just love that phrase) and have additional funds to invest, consider a taxable brokerage or mutual fund account. Right now, long term capital gains are 15% and certain dividends are also taxed at 15% - pretty attractive tax rates.