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dsachnoff
Level 2

RMD and Roth

My wife and I are currently drawing RMD's, however, I did work and received several W2's.  How much can I put into a Roth?   I believe it is up $7000 depending on how much I earned. The question is if I earned $5000 can I put $5000 into my Roth and $5000 into my wife's Roth or am I restricted to the total amount earned (W2's) and divide between the two ROTH's?  

7 Replies
macuser_22
Level 15

RMD and Roth

The total of all IRA contribution from both spouses cannot exceed the total taxable compensation for the year assuming you are filing a joint tax return.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
dsachnoff
Level 2

RMD and Roth

Thanks.  That is what I thought but wasn't sure because in previous years I exceeded the max amount by at least two times so I didn't give it much thought.

dsachnoff
Level 2

RMD and Roth

I had earned income from a my business of $3145 (Officiate sports) and earned income from my part time job (teaching) of $3546.  I would assume based on this I could put $6691 into my roth, however, even though I entered the $3145 into turbotax (Home and Business) - one not reported on 1099-NEC nor 1099-MISC ($1682)  and the other on a 1099-NEC ($1463).  Schedue C shows both entries, however, what is reported on the 1040 line 8 is only $1330 (this is net after expenses).  Does this mean I can only add $1330 + $3546 to my roth?

macuser_22
Level 15

RMD and Roth

Your earned compensation  form working is the W-2 box 1 amount minus box 11 plus net self-employed income minus the deductible part of SE tax minus any contributions to SE retirement plans which is the 1040 Schedule 1 line 3 minus the total of lines 14 & 15.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
dsachnoff
Level 2

RMD and Roth

Does this mean the roth contribution is not based on gross earned income?

macuser_22
Level 15

RMD and Roth


@dsachnoff wrote:

Does this mean the roth contribution is not based on gross earned income?


Correct.  Based on "taxable" compensation - not gross.

 

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

For 2019 and 2020, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or
your taxable compensation for the year.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2020_publink1000230355

See this IRS article for Roth contribution limits:

https://www.irs.gov/retirement-plans/roth-iras

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
dsachnoff
Level 2

RMD and Roth

Thank you.

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