topic K1's and Roth IRA's in Retirement tax questions

K1's and Roth IRA's

dwauxier — Wed, 31 Jul 2019 01:50:50 GMT

I'm a partner in a family business which is a S Corporation and also a partner with my brothers in a LLP. Both of which I receive a K-1. My wife recently left a nursing job after 10 years due to the hospital closing down. She has a small 401k that we are looking at rolling into an IRA and then a Roth IRA. When looking at the maximum contribution for the Roth IRA as a couple, it appears to be $7000 if we earn less than $199,000.00. Between the two of us our w-2's come well below that. But if I add in my dividends from the S corporation, we exceed that amount. Where I'm confused is. I receive K-1's from both the S corp. and the LLP. The S corp is the only one I receive a dividend from. It appears that S corp dividends don't count towards the income cap for funding my wife's Roth IRA. I don't and haven't received any dividends from the LLP. So I'm not sure whither we can fund the Roth or not??? Any help would be greatly appreciated

Re: K1's and Roth IRA's

Anonymous — Wed, 31 Jul 2019 06:14:47 GMT

you are doing a backdoor Roth conversion

read this article.

https://www.rothira.com/what-is-a-backdoor-roth-ira

Re: K1's and Roth IRA's

dmertz — Wed, 31 Jul 2019 11:53:07 GMT

The phase-out range for a Roth IRA contribution for 2019 for someone filing jointly begins at a modified AGI of $193,000 and goes through $203,000. Modified AGI for this purpose includes all of your taxable income, not just earned income (except for certain uncommon items), so it includes your taxable dividends from the S corp and the the taxable income from the LLP. Because your modified AGI is more than $203,000, neither you nor your wife is permitted to make a regular Roth IRA contribution for 2019.

HACKITOFF is suggesting the possibility of making contributions to a traditional IRA instead, then doing a Roth conversion, instead of making contributing regular contributions to Roth IRAs.