AM I REALLY LIMITED TO AN INCOME OF $10,000?

[Guest mustangmaddi]

My future husband and I will be filing jointly for year 2006 and I would like to open up a Roth IRA for each of us. He makes 75K a year and I make 36K a year on long term disability. Now that I've gotten the question of whether my long term disability is considered 'earned income' by the IRS (it is) I've been told that I can't earn more than $10,000 and have my own Roth IRA. My State Farm agent told me this. Can this really be correct? How's a lady supposed to have her own individual account and still be married without a 'spousal' Roth that is basically and appendage of her husbands Roth? Can someone give me a claification on this???

[jevd]

See Publication 590. Chapter 2

$ 10,000 Income Limit is for married filing separately.

HERE

[txdd]

A "spousal" Roth IRA is just one established based on your spouse's earned income because your own earned income in insufficient.

Once established, the IRA is indistinguishable from one based on your own earned income. It has no connection to any IRA in your spouse's name and is yours in every sense of the word. Also, contributions based on your own and your spouse's income can be combined in the same IRA as long as the total doesn't exceed the annual individual limit and your combined contributions don't exceed your combined earned income.

[John G]

The State Farm agent may have thought you were married filing separately. Sadly, the ROTH/IRA rules are way more complicated than they need to be and this leads to misunderstandings. Congress could have made all Roths "Universal" with no income limitations.... but, as with most tax code, lots of complications crept in.

It looks to me like you both qualify for Roths based upon what you have disclosed - both for 2005 and 2006. All IRAs are individual accounts.... that is what the "I" stands for. There is not such thing as a "joint" IRA.