Jackson and Ashley Turner (both 45 years old) are married and want to contribute
ID: 2422701 • Letter: J
Question
Jackson and Ashley Turner (both 45 years old) are married and want to contribute to a Roth IRA for Ashley. In 2015, their AGI is $189,600. Jackson and Ashley each earned half of the income.
How much can Ashley contribute to her Roth IRA if they file a joint return?
Assume that Ashley earned all of the couple’s income and that she contributed the maximum amount she is allowed to contribute to a Roth IRA. What amount can be contributed to Jackson’s Roth IRA if they file a joint return?
a.How much can Ashley contribute to her Roth IRA if they file a joint return?
b. How much can Ashley contribute if she files a separate return? c.Assume that Ashley earned all of the couple’s income and that she contributed the maximum amount she is allowed to contribute to a Roth IRA. What amount can be contributed to Jackson’s Roth IRA if they file a joint return?
Explanation / Answer
a. Individulas are allowed to contribute to a Roth IRA as long as their AGI falls below certain threshold limits. The AGI limits for married individuals filing jointly is between $183,000 and $193,000 . Because Jakson and Ashley's AGI is 66% of the way between $183,000 and 1,93,000 [($189,600-183,000)/(193,000-183,000)], Ashley maximum contribution is phased out by 66%. That is out of $5,000 maximum contribution, Ashley can contribute $1700 [$5,000 *34% (100%-66% phased out percentage]
b. The AGI threshold limits for married individuals filing seperately is between 0 and $10,000. Thus if they filed seperately, Ashley would not be able to contribute to a Roth IRA.
c. Same as answer a i.e., $1,700
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