Roth IRA contribution limits for mostly retired folks

Financial Planning Tax Strategies
1

Hi,
I think I have this right but would like confirmation from others on this board, if you don’t mind.
A couple, filing jointly, partially retired.
Spouse one: Gross wages of $13K
Spouse two: Self-employment net income of $1500
Spouse one can contribute $8K
Spouse two can contribute a spousal contribution of $5K and a self-employed amount of $1500.
So the couple combined can contribute $14500.
Sounds right?
Thanks,
RB

2

As long as you are within the IRA contribution limits (7000 or 8000 (over 50)) and between the two of you make (contributions) less than or equal to your combined incomes, you should be good. So from your example, as long as one or both of you is over age 50 it seems to check out. If you are both under 50, you would have to keep it to $14k.

Contribution limits: $7k + $8k = $15k (or 2 * $8k = $16k)
Income: $13k + $1.5k = $14.5k

3

Both over 50. Thanks.

4

Not exactly. The $1500 in self-employment income has to be adjusted down by the amount of the self-employment tax deduction.

From IRS Pub 590-A 2024 Publication 590-A

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So with $1500 in self-employment income, the self-employment tax deduction would be $115 (7.65% of $1500), so the net compensation after the self-employment deduction would be $1385. So Spouse 2 could make a total contribution of $6385, and the total contributed between both spouses could be $14,385

AJ

1 Like
5

Except you have to adjust self-employment income down by the allowed self-employment tax deduction. So, close, but not exactly.

AJ

1 Like
6

Thanks AJ! That little tidbit is good to know and important!
Thank you.
RB