Roth IRA Contribution Limits

Submitted by David Mitchell on Wed, 2020-08-12 16:13

One spouse is retired with $0 of earned income and the other spouse earned $20,000 in 2020 as wages. They are both over age 50 and file a joint tax return. If out of the $20,000 of wages, the individual put $10,000 pre-tax into a 403b, does that mean that their combines Roth IRA contribution can be up to $10,000 or are they eligible to still both contribute $7,000 for a total of $14,000?



Submitted by Alan - IRA critic on Wed, 2020-08-12 17:18

If working spouse’s gross income is 20k, a 10k 403b contribution will reduce the Box 1 W2 income to 10k. The max total IRA contribution including spousal contributions cannot exceed 10k.  However, if the 403b contribution was made to a designated Roth 403b option instead of pre tax, Box 1 would not be reduced, and in that case the IRA contributions would max at 14k.



Submitted by Travis Chance on Mon, 2020-08-24 15:10

I have a client that contributed $7,000 to her Roth and Traditional IRA in 2019, total of $14k over both accounts. Her accountant wants her to recharacterize. Also, her husband died in 2019, mid year. What are her options?



Submitted by Alan - IRA critic on Mon, 2020-08-24 16:19

  • Recharacterization will not solve the problem. If the 2019 return or an extension was filed by 7/15, she has until 10/15 to request a return of whichever contribution she chooses, but there are MAGI limits to make either a Roth contribution or lower limits to deduct a TIRA contribution that determine which contribution she chooses to retain.  Another possibility due to huge market gains is to pay the excise tax for 2019 on the Roth contribution which is deemed to be the excess amount and have the Roth contribution carried to 2020 if she will be eligible. That would avoid the tax on the removed earnings (and penalty if under 59.5) which might be more than the 6% excise tax.  Note that husband’s death in 2019 is not a factor since a final joint return for 2019 is allowed.
  • There is no way for one of these contributions to be assigned to husband.


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