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My wife and I are newly married and are lucky to be making enough to have a small amount left to make in investments on a monthly basis. We're both employed full time and in our early twenties. I talked to a financial adviser prior to getting married and I started making Roth IRA contributions. I know there is a cap at $5,500, but what about married couples?

I would assume that a married couple could contribute double that amount because they could be considered two individuals, but Google searches seem to say otherwise. I can't find a definite answer on this. Is my wife able to open her own Roth IRA account and deduct from her own bank account to her own limit of $5,500? How would this affect our tax returns at the end of the year?

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    You are newly married I(Congratulations!) and presumably regard yourself as the Head of the newly formed Household but for tax purposes, your status cannot be Head of Household which has a specific meaning in tax law. Your tax status can be Married Filing Jointly or Married Filing Separately (unless, God forbid, you divorce by December 31 and have a child living with you) in which case you have HoH status. Please edit the Title of your question appropriately.
    – Dilip Sarwate
    Commented May 28, 2014 at 22:20
  • Thank you for that catch. I haven't filed taxes as a married individual and didn't realize there was a difference.
    – vbiqvitovs
    Commented May 29, 2014 at 13:08

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There are many nuances to who can make Roth IRA contributions. For 2014, married couples filing joint federal income tax returns are prohibited from making any Roth IRA contributions if their modified adjusted gross income (MAGI) is $191K or more; but if they are filing separate income tax returns and lived with each other at any time during the year, the limit drops to $10K, yes, $10K. Also, if your MAGI is below the appropriate limits, then as long as at least one of you has taxable compensation (wages, self-employment income etc), both can contribute to their individual Roth IRAs subject to a maximum of $5500 for each person and to the total contribution for both not exceeding the total taxable compensation for both. So Yes, assuming that you will be filing a joint tax return for 2014 and your MAGI will be below the limits, your wife can open her own Roth IRA, and she does not need to send the money to the Roth IRA custodian out of her own bank account; she can send it from a joint bank account or you can send the money from your own account. Finally, your Roth IRA contributions have no effect on your taxes; indeed, the Roth IRA contributions are not even reported on the Federal tax return.

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    Also, the contribution maximum is the total amount put into all your IRAs combined; both Traditional and Roth.
    – Michael Deardeuff
    Commented May 29, 2014 at 2:00
  • @MichaelDeardeuff Yes indeed. Thanks for the additional information. I was looking solely at Roth IRAs which are what the OP wanted to know about.
    – Dilip Sarwate
    Commented May 29, 2014 at 2:06
  • Also-also, your spouse's IRA must be separate from your own. You cannot put $11000 into one IRA and count as both of your contributions. Large penalties will surely follow.
    – Michael Deardeuff
    Commented May 29, 2014 at 2:10
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IRA stands for INDIVIDUAL Retirement Account. You can contribute up to the maximum per individual for each individuals account.

I have an IRA, my wife has her IRA. I work a salary job, she works as a housewife. Each account gets $5500 a year. Its done for us as individuals not collectively as a household. Both have the favorable tax treatments per IRS rules.

I looked this up and found this handy FAQ.

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. If neither spouse participated in a retirement plan at work, all of your contributions will be deductible.

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  • That's exactly what I was looking for. It's also good to know you could start one for a child, though I would think there could possibly be better options in savings for children (529 plan for education, etc).
    – vbiqvitovs
    Commented May 28, 2014 at 20:50
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    Do you have a reference that supports your contention that you could open an IRA for your son? As long as at least one of you and your spouse has compensation (wages, self-employment income, etc), either or both of you can contribute to an IRA (max of $5500 for each, total IRA contribution cannot exceed total compensation, etc) but I have never heard that you can open an IRA in your child's name as well; unless, of course, your child has compensation from babysitting/lawn-mowing/car-washing/paper route etc. -1 pending your including a reference or retracting this statement.
    – Dilip Sarwate
    Commented May 28, 2014 at 21:13
  • @vbiqvitovs Please be very careful and find out the truth for yourself before following Freheit's advice about opening an IRA for a child. Publication 590, available from the IRS web site, is a good start (though not an easy read).
    – Dilip Sarwate
    Commented May 28, 2014 at 21:15
  • I removed the remark about an IRA for a dependent minor. Is there anything wrong with the rest of my answer?
    – Freiheit
    Commented May 28, 2014 at 21:27
  • @Freiheit I am removing the -1 since you deleted the egregious error that I complained about. The rest of your answer says the right sort of things but there are many nuances in a couple's situation that could make the answer incorrect.
    – Dilip Sarwate
    Commented May 28, 2014 at 21:34

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