Roth Contribution Basics

Question 1

What are the MAGI phase out limits for eligibility to contribute to a Roth IRA in 2015/2016 for single and married filing jointly?

Answer 1

Single - Phase out starts at $116,000 and ends at $131,000.

MFJ - Phase out starts at $183,000 and ends at $193,000

Question 2

Which of the following impact eligibility to make Roth contributions:

1. MAGI
2. Participation in an employer retirement plan
3. Contributions already made to a traditional IRA
4. Execution of Roth conversions

Answer 2

Only 1 and 3. MAGI determines eligibility according to the IRS phaseout schedule. Total IRA contribution limits in any given year apply to all types of personal IRAs (traditional IRAs and Roth IRA), but not SEP IRAs.

Participation in an employer retirement plan has no impact, nor does any Roth conversions made in the year in which a Roth IRA contribution is being contemplated.

Question 3

Which of the following re-characterizations are allowable under the law?

1. Re-characterize a Roth conversion back to a traditional IRA
2. Re-characterize a traditional IRA contribution to a Roth contribution

What is the deadline?

Answer 3

Both are legal re-characterizations.

For either type, the deadline is the tax filing deadline plus extensions for the tax year the conversion or contribution were made.