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Author: mawhinney Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19218  
Subject: ROTH IRA Date: 12/8/2005 8:02 PM
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A retiree receiving SS takes a short term consulting position & earns $7500, which is the only earned income for the year. Other than the couple's SS payments their only source of income is from dividend distributions. The couple files a joint return. The spouse does not hold a paying position. If the couple meets the income eligibility requirements, can each contribute $4500 to Roth IRAs for 2005?
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10229 of 19218
Subject: Re: ROTH IRA Date: 12/8/2005 10:52 PM
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Check out Publication 590 available for download from irs.gov for details, but generally yes, the $7500 qualifies you and your spouse to make contributions to a Roth IRA for the year in which your earned the $7500. Social Security has no effect on the Roth contributions. However, the total of your contribution and your spouses contribution is limited to $7500.

For details of qualifications for spousal Roth IRA contributions see p 53 and 55 of Pub 590. The spouses limits are discussed on p. 9.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10230 of 19218
Subject: Re: ROTH IRA Date: 12/9/2005 2:28 AM
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A retiree receiving SS takes a short term consulting position & earns $7500, which is the only earned income for the year.

As has been mentioned, your total contribution between the two of you is limited to your earned income. I'm assuming that this consulting income will be self-employment subject to self-employment tax. You get an adjustment to income for half the self-employment tax, and that also reduces your taxable compensation on which to base an IRA contribution.

Bottom line, your maximum combined contribution will be less than $7,500.

Phil

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Author: DorothyM Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10231 of 19218
Subject: Re: ROTH IRA Date: 12/9/2005 9:58 AM
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A retiree receiving SS takes a short term consulting position & earns $7500, which is the only earned income for the year. Other than the couple's SS payments their only source of income is from dividend distributions. The couple files a joint return. The spouse does not hold a paying position. If the couple meets the income eligibility requirements, can each contribute $4500 to Roth IRAs for 2005?

Note that IRA (Roth and Traditional) limit for 2006 is $4000 + a catchup, for over-50s, of $1000 -- a total of $5000.

http://www.fool.com/taxes/2001/taxes010622.htm

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