Options for me to send money to my wife's Roth IRA account.

[noviceattax]

Hello community,

My question is about transferring money to my wife's Roth IRA account.

Context: Until last year we used to fund her Roth account via her bank account. However, we want to know if there is a way that we can send money directly from my bank account (individual not joint) to her Roth account. We asked this question to our broker's customer service line. They suggested the following two methods.

• Method 1: We do a wire transfer from my bank account to her Roth IRA directly. 
• Method 2: First we open an investment account with the broker for her and then I transfer the money to her investment account and then we transfer it from her investment account to her Roth IRA.

My Question: What I want to know from people here that if we use the Method 1 above will the Roth investement be considered as her Roth investment or not since the money is going from my bank account. How about Method 2?

Background about our tax, immigration, and Roth account status:

1. She is an international citizen and is on a H4 visa.
2. She is without EAD and doesn't do a job or a business.
3. I am also an international citizen on H1-B visa.
4. We file our joint tax returns "Married filing jointly". We file as Resident Aliens.
5. She is not eligible to get an SSN and doesn't have one. Though she has an ITIN.
6. She does have a Roth IRA account opened with a broker and we deposited money to it last year.
7. I have my separate Roth IRA account and I invest into it every year.

Please feel free to ask for any clarifications.

[guywong]

I don't see any problem with either Method 1 or 2.  As long as your wife is eligible for a Roth IRA, how and where the money came from to fund the Roth IRA is irrelevant.  

I'm curious as to why you and your wife are opening a Roth IRA since both of you are here on a temporary visa?  Roth contributions are not tax deductible.  While it's true that withdrawals after 5 years could be tax free.  But will you and your wife be in the U.S. by the time you can withdraw the funds tax free (reaching age 59½)?  If you will be back to your home country by then, what is the benefit of contributing to a Roth IRA?  Your home country may tax you for the withdrawal.  No need to answer my question.  Just something for you to ponder.  Good luck!

[Mike9241]

both work but using method 2 is silly. 

[Bsch4477]

It’s her IRA no matter who actually funded it. Doesn’t matter how you fund it. If she is on your joint checking account or if she has her own, she can just send a check to the fiduciary with instructions to fund her IRA for a particular year. 

[noviceattax]

Okay. Now one of the agents earlier told us that since this is her IRA so the money should come from her income and her account. Hence, they suggested method 2.

So you are saying that if I fund the account directly from my individual (NOT a joint) checking account that is also valid. Correct?

Thanks,

[Bsch4477]

Correct. Since she has no income she will have a”spousal “ IRA which means you fund it. Again, it shouldn’t matter where the funds come from as long as she is eligible for the contribution. 

[noviceattax]

Thanks for sharing the elaborate context. We will consider that while planning future things.

I have certain other follow-ups: If we are filing joint returns and I am the only one who is earning can we both still invest in our individual Roths to the max of the permissible limits into individual accounts?

Let's assume hypothetically that if someone's joint income is 100K then they are allowed to invest 5K max in Roth. Let's say our income is 99.5K then can we both invest 5K each i.e. a total of $10K?

Thanks,

[noviceattax]

Thank you. Do we need to tell the broker or IRS that it is a "Spousal" IRA? Do we need to do something different in the registration? Or you are telling this just as a concept? We file joint returns, though.

[Bsch4477]

Yes.