Married Roth IRA Rules: Contribution Limits and Filing Status Effects

For married couples planning their financial future, understanding Roth IRA rules is essential. These accounts offer tax-free growth and withdrawals in retirement, making them a valuable tool for long-term savings. However, contribution limits and the effects of filing status can be complex.

Effectively navigating these rules helps couples maximize retirement savings while avoiding penalties. Below, we explore key factors such as income thresholds, spousal account options, and how filing status affects contributions.

Income Threshold Requirements

For the tax year 2024, married couples filing jointly can contribute the full amount to a Roth IRA if their modified adjusted gross income (MAGI) is below $228,000. Contributions are reduced for MAGI between $218,000 and $228,000, and direct contributions are not allowed once MAGI exceeds $228,000. These thresholds are adjusted annually for inflation. Couples with higher incomes may consider a backdoor Roth IRA conversion, which involves contributing to a traditional IRA and converting those funds to a Roth IRA. However, this strategy requires careful planning due to potential tax implications.

Contribution Amounts

In 2024, individuals under 50 can contribute up to $6,500 to a Roth IRA, while those 50 and older can make an additional $1,000 catch-up contribution, totaling $7,500. These limits apply to each spouse individually. A couple can contribute a combined total of $13,000, or $15,000 if both qualify for catch-up contributions. Each spouse must have earned income equal to or greater than their contribution. If one spouse lacks earned income, they can still contribute through spousal IRA rules, provided the couple files jointly.

Spousal Account Rules

A spousal IRA allows a non-working or low-earning spouse to contribute to a Roth IRA based on the working spouse’s income, enhancing the couple’s retirement savings. As long as the couple files a joint tax return, the non-earning spouse can contribute to a separate Roth IRA. This structure enables each spouse to manage their account independently, tailoring investments to their individual goals and risk tolerance. Together, a couple could contribute up to $15,000 annually if eligible for catch-up contributions, strengthening their financial future.

Filing Status Effects

Filing status plays a significant role in determining Roth IRA contribution limits. Couples filing jointly benefit from higher income limits, allowing for greater contributions. Joint filers can use combined income to determine eligibility, maximizing savings opportunities. In contrast, couples filing separately face stricter limits. For 2024, married individuals filing separately who lived together at any point during the year must have a MAGI below $10,000 to contribute to a Roth IRA. This lower threshold can significantly restrict retirement planning options.

Penalties for Excess Funding

Exceeding Roth IRA contribution limits triggers a 6% excise tax on the excess amount, calculated annually until corrected. For instance, a $1,000 over-contribution results in a $60 tax each year until resolved. To fix this, couples can withdraw the excess amount and any earnings before the tax filing deadline, though earnings are subject to income tax and, if under 59½, a 10% early withdrawal penalty. Alternatively, the excess can be applied to the next tax year’s contributions if limits allow, though the 6% penalty still applies for the year of over-contribution.