What can I contribute to my Roth 401k and Roth IRA?

If I contribute all of my compensation ($13,000) to a Roth 401k, can I also contribute $6,500 to a Roth IRA for me and $6,500 for my spouse all in the same year. I will have a total of $13,000 taxable compensation in 2016 because I am working only in January and February.

401(k), IRAs, Retirement Plans
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June 2016

Yes, IRA contributions (whether deductible or non-deductible) are only able to be made with earned income (money derived from paid work). Earned income includes:

  • Wages
  • Salary
  • Commission
  • Bonuses
  • Tips

As far as contributing to your spouse's Roth IRA, you can do that with the $13,000 received from working in January and February only. Even if your spouse is not working, the IRS allows the working spouse's compensation to contribute to the non-working spouse's IRA (whether traditional or Roth).

Remember, Roth IRA contributions are in accordance with your Modified Adjusted Gross Income (MAGI). 

Married limits:

  • If your MAGI is $184,000 or below, you can make a full contribution ($5,500 or $6,500 you're age 50 or older)
  • If your MAGI is more than $184,000 but less than $194,000, you can make a reduced contribution
  • If your MAGI is more than $194,000, you are ineligible to make a contribution

If you have any further questions, I'd be happy to help.

March 2016
March 2016