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.
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:
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).
- 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.
Yes, as long as you meet all requirements. First, earned income. Based on your question, you will have $13,000 in earned income. Second, if you are filing jointly the combined income (Modified Adjusted Gross Income)limits for 2016 phases out at $184,000-$194,000 joint . This means if your MAGI is less than $184,000, you can contribute to the Roth 401k and each contribute to a Roth IRA.
You cannot contribute more to your retirement accounts than your earned income. That means you will be limited to a total contribution for you and your spouse of $13,000. If your spouse has earned income, also, however, he/she can contribute the lower of $6,500 or earned income for each of you. So, for example, if you earn $13k and contribute it all to your Roth-k and your spouse has earned income of $13k, he/she can contribute $6,500 each to an IRA and a spousal IRA for you. Of course, this assumes that you are both age 50+.