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Is it possible to open and fund to max amount both IRA and Roth IRA for non-working spouse in same year? I have already opened IRA and got tax benefit for it, but now I am thinking of opening Roth IRA as well and fund for year 2013, but not sure if it is allowed?

In summary for a given tax year, Can I put $11000 in IRA + Roth IRA for my non-working spouse?

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2 Answers 2

up vote 6 down vote accepted

You can OPEN whatever accounts you wish, you can only FUND your retirement accounts (i.e. IRA + Roth IRA) up to the annual contribution limit.

Any given individual's annual contribution limit for 2013/14 is $5,500 ($6,500 if you are older than 50).

Remember you can open and fund any account (as if it were done in the previous year) prior to the tax filing deadline of the given year. E.g. You can still open 2013 accounts until you file your 2013 tax return.

Examples:

  1. During 2013 you open an IRA and fund it with $2,500. You can open a Roth IRA in 2013 and fund it $3,000. For a total of $5,500 (contribution limit).

  2. During 2013 you open an IRA and fund it with $5,500. During 2014 you open a Roth IRA and fund it with $5,500.

  3. Your spouse is allowed to do the same, effectively doubling the contribution limit. Mind you your contributions to not exceed your income in the same taxable year.

Assuming you are filing jointly this "doubled" limit can even be met even if only one spouse has earned income!

AS SPOUSES, the total combined annual contribution limit is "doubled." So $11,000 normally and $13,000 if you are each 50+ ($12,000 if one < 50 and one 50+).

All this is to say, as an individual you are allowed up to $5,500/6,500 per year divided among whatever accounts you choose and up to $11,000/$13,000 per year as spouses (two individuals).

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You mean I can't contribute $5500 for IRA and $5500 for Roth IRA (Combined $11,000) for my non-working spouse for year 2013? I didn't knew $5500 limit is combined limit and not for each IRA and Roth IRA as Roth IRA doesn't give any immediate tax advantage. –  user2763443 Apr 1 at 22:40
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Right, total limit across all iras is $5500. The question of which flavor IRA is best for you is another story. –  JoeTaxpayer Apr 2 at 1:54

Yes, you can open multiple IRAs, but the contribution limits are what you need to pay attention to.

Roth IRAs and traditional IRAs. If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions for the year to all IRAs other than Roth IRAs. Employer contributions under a SEP or SIMPLE IRA plan do not affect this limit. This means that your contribution limit is the lesser of:

  • $5,500 ($6,500 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or
  • Your taxable compensation minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs.

(Source)

Also keep in mind that the contribution limits for you and your spouse are combined:

If you file a joint return, you and your spouse can each make IRA contributions even if only one of you has taxable compensation. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. It doesn’t matter which spouse earned the compensation.

(Source)

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