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Author: Aleph Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Roth IRA Marriage Penalty!! Date: 9/2/2003 1:24 PM
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I am getting married later this month (September) and was shocked to learn that married individuals filing separately cannot contribute to a Roth IRA if either has an adjusted gross income (AGI) greater than $10,000! Does anyone know if I can contribute some portion of the allowed annual contribution amount (having been UNmarried for nearly 9 months of the 2003 tax year)? I've always taken advantage of this (Roth IRA) great tax benefit. I've been aware of the "marriage penalty" but never looked into it in any detail before. Ouch! I know we have the option of filing jointly, but I'd hoped to avoid that since my wife-to-be is not a good record keeper. I'd rather not go there <g>.
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Author: kimflournoy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37081 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/2/2003 2:00 PM
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married individuals filing separately cannot contribute to a Roth IRA if either has an adjusted gross income (AGI) greater than $10,000

FYI, I think you're missing a zero in there... :-)

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37082 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/2/2003 2:01 PM
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Greetings, Aleph, and welcome. You asked:

am getting married later this month (September) and was shocked to learn that married individuals filing separately cannot contribute to a Roth IRA if either has an adjusted gross income (AGI) greater than $10,000! Does anyone know if I can contribute some portion of the allowed annual contribution amount (having been UNmarried for nearly 9 months of the 2003 tax year)?

IF you are married as of the end of your tax-year (12/31 for most folks) and IF you elect to file separately and IF your modified adjusted gross income is more than $10,000, THEN under current law any Roth contribution you made for that tax-year will be disallowed. The law makes no exceptions for the part of the tax-year you may have been single.

I've always taken advantage of this (Roth IRA) great tax benefit. I've been aware of the "marriage penalty" but never looked into it in any detail before. Ouch! I know we have the option of filing jointly, but I'd hoped to avoid that since my wife-to-be is not a good record keeper. I'd rather not go there <g>.

Unfortunately, if you wish to use a Roth, then under existing law the only way the contribution will be allowed is to remain single until after the end of the tax-year or file your income tax return jointly. After all, at some point you're gonna file jointly anyway, right? Might as well start this tax-year as in any other. <g>

Regards...Pixy

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37083 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/2/2003 2:08 PM
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kimflournoy writes:

married individuals filing separately cannot contribute to a Roth IRA if either has an adjusted gross income (AGI) greater than $10,000

FYI, I think you're missing a zero in there... :-)


No, Aleph wrote that correctly. The rules for a married person filing separately stipulate that a Roth annual contribution is not allowed when modified AGI reaches $10K. The $100,000 stipulation you're thinking of is for a conversion contribution (i.e., a rollover of a traditional IRA to a Roth IRA).

For details, see our IRA Area at http://www.fool.com/money/allaboutiras/allaboutiras.htm and IRS Publication 590 (Individual Retirement Arrangements) available for download at http://www.irs.ustreas.gov/forms_pubs/pubs.html.


Regards...Pixy

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Author: windyelliott Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37085 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/2/2003 7:53 PM
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So why don't they file jointly so they can both contribute the full amount assuming their combined income is less then the max?

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Author: Aleph Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37089 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/3/2003 3:11 PM
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No, I believe that number is correct. I did a double take when I first read it because it doesn't seem to make sense and it effectively eliminates the Roth option for me (unless my wife and I file jointly).

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Author: Aleph Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 37090 of 76237
Subject: Re: Roth IRA Marriage Penalty!! Date: 9/3/2003 3:24 PM
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Thank you for the welcome Pixy. And thank you for the clarification. I guess we'll bite the bullet and file jointly <g>

Thanks,
Aleph



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