Participation in SARSEP and Roth IRA

[Guest Nancy Lorenzen]

My company makes a SARSEP contribtuion for me each year. Does this have any effect on my ability to make a Roth contribution?

[Kathy]

No. Anyone who has earned income and whose adjusted gross income falls below the maximum level ($150,000 for married filing joint return, $95,000 for single filers) can make a Roth IRA contribution of up to the lesser of $2,000 or their earned income, regardless of active participation in a retirement plan at work. The $2,000 maximum for the Roth is reduced by any traditional IRA contributions you might make (the limit on combined IRA contributions is the lesser of earned income or $2,000 for each individual) but is unaffected by contributions your employer makes on your behalf and unaffected by salary deferrals you make through a SAR SEP.