Roth IRA Contribution Rules When You’re Married Filing Separately
If your tax status is married filing separately and you lived with your spouse at any time during the year, here are your Roth IRA contribution limits:
You can contribute up to the maximum Roth IRA contribution limit of $6,000 ($7,000 for ages 50 or older) in 2022 if your modified AGI (MAGI) is $0. Maximum contribution allowed in 2023 is $6,500 ($7,500 for ages 50 or older.)You can contribute a reduced amount if your MAGI is more than $0 but less than $10,000.You can’t contribute to your Roth IRA if your MAGI is $10,000 or more.
Calculating Your Contribution When Married Filing Separately
The first and third bullets in Worksheet 2-1 are straightforward, but the second bullet takes an additional series of simple calculations to figure it out using Worksheet 2-2 from the IRS’ IRA contributions explainer. Let’s say, for example, your MAGI is $5,000 in 2022. (It has to be more than $0 or less than $10,000 to qualify for reduced contributions.): *The calculation here includes the lesser of your IRA contribution limit or taxable income. For the purpose of this example, the IRA contribution limit was lower than the taxable income. You can make contributions at any point during the tax year until the due date for your tax return.
Why Do Roth IRAs Have Income Limits
The government needs tax revenue to keep the country running, so it sets limits on certain deductions, credits, and retirement contributions. Roth IRAs are no exception. Assume the tax code allowed you to live with your spouse and file separately from them using the same contribution rules as single filers. Your and your spouse’s MAGI is $100,000. You could each contribute $6,000 to your Roth IRAs if IRC rules weren’t in place, assuming you’re both younger than age 50. Your family would enjoy tax-free retirement savings growth on an investment of $12,000 per year, or $14,000 if both you and your spouse are age 50 or older. But because the tax code has placed limits on what you can contribute, your combined MAGI of $200,000 disqualifies you from making Roth IRA contributions.
Alternatives to Roth IRAs When Married Filing Separately
Roth IRAs aren’t the only tax-advantaged retirement savings plan out there. Your ability to contribute to a traditional IRA isn’t affected at all if you file a separate married return unless your spouse is covered by a retirement plan at work. If your spouse is covered by a retirement plan at work, you’re limited to the same MAGI threshold of $10,000 if either you or your spouse is covered by a work plan. Of course, traditional IRAs are pre-tax contributions, which means that money is taxed at withdrawal. With Roth IRAs, since you’ve already paid taxes on the money you put into the plan, barring certain cases, there is no tax implication when you take your money out.
