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Combine Roth IRA's for a couple?
Old 02-21-2019, 08:55 AM   #1
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Combine Roth IRA's for a couple?

I opened a Roth IRA last year and am slowing converting my traditional to the Roth. We opened a second Roth IRA for my wife yesterday so we can set aside a bit more tax free money for retirement. Now with two Roth's in the family, I started scheming for the future.

I know IRA's are for individuals, but is there any way to combine the assets once we are retired? Maybe sell her IRA funds and buy more of my IRA funds? Technically it would still be my individual IRA account, but it would combine the funds of our two accounts into one. As long as we didn't exceed the annual contribution limit and one of us was still earning enough income to qualify for the contribution I would think it would work. Since they're both Roth accounts I wouldn't think any taxes would be involved?

Of course, there's probably no point to this. It would probably be easier just to withdraw from her account first (assuming her balance was smaller). But I'm always looking for ways to simplify whenever possible.
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Old 02-21-2019, 08:57 AM   #2
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Not possible. as you stated an IRA is an INDIVIDUAL Retirement Account.
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Old 02-21-2019, 09:09 AM   #3
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Not possible. as you stated an IRA is an INDIVIDUAL Retirement Account.
Why? I would still have my Individual Roth account. She would just be withdrawing funds from her Roth, then I would contribute those funds to my Roth. If I was earning 7K per year from a part-time job I could contribute 7K to my Roth and she could still withdraw 7K from her Roth. Isn't that accomplishing the same thing?

In any case, it's just a thought experiment and probably not worth the trouble just to minimize the number of accounts we have.
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Old 02-21-2019, 09:34 AM   #4
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Why? I would still have my Individual Roth account. She would just be withdrawing funds from her Roth, then I would contribute those funds to my Roth. If I was earning 7K per year from a part-time job I could contribute 7K to my Roth and she could still withdraw 7K from her Roth. Isn't that accomplishing the same thing?

In any case, it's just a thought experiment and probably not worth the trouble just to minimize the number of accounts we have.

Draining her account while adding to your account is not a problem assuming you meet all the other requirements. But "combining assets" or "combine the funds of our two accounts into one" is not possible.
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Old 02-21-2019, 10:34 AM   #5
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I placed my friend in the best place that would take Medicaid once the money ran out. You usually have to be able to self pay for a year. The price doubled when the level of care went up.
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Old 02-21-2019, 10:53 AM   #6
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I placed my friend in the best place that would take Medicaid once the money ran out. You usually have to be able to self pay for a year. The price doubled when the level of care went up.
Wrong topic?
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Old 02-21-2019, 10:53 AM   #7
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The "I could tell you how to do it, but then I'd have to kill you" rule is very applicable to this situation: a spouse who inherits an IRA can combine it with his/her own.
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Old 02-21-2019, 10:57 AM   #8
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In addition to the excellent answers given by Spock, you have to have earned income to contribute to a Roth. Withdrawing $7K from your wife's Roth doesn't count as earned income. It's not at all comparable to earning $7K from a part-time job.

My husband and I both have Roth accounts. We can contribute to both based on his earned income. (I have none.) It's not at all a burden to manage both accounts.
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Old 02-21-2019, 11:09 AM   #9
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Originally Posted by mountainsoft View Post
I opened a Roth IRA last year and am slowing converting my traditional to the Roth. We opened a second Roth IRA for my wife yesterday so we can set aside a bit more tax free money for retirement. Now with two Roth's in the family, I started scheming for the future.

I know IRA's are for individuals, but is there any way to combine the assets once we are retired? Maybe sell her IRA funds and buy more of my IRA funds? Technically it would still be my individual IRA account, but it would combine the funds of our two accounts into one. As long as we didn't exceed the annual contribution limit and one of us was still earning enough income to qualify for the contribution I would think it would work. Since they're both Roth accounts I wouldn't think any taxes would be involved?

Of course, there's probably no point to this. It would probably be easier just to withdraw from her account first (assuming her balance was smaller). But I'm always looking for ways to simplify whenever possible.
Not to worry! The courts will combine them for you, as they see fit, should either one of you decide you would prefer to be solo.

Ha
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Old 02-21-2019, 11:15 AM   #10
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Originally Posted by mountainsoft View Post
I opened a Roth IRA last year and am slowing converting my traditional to the Roth. We opened a second Roth IRA for my wife yesterday so we can set aside a bit more tax free money for retirement. Now with two Roth's in the family, I started scheming for the future.

I know IRA's are for individuals, but is there any way to combine the assets once we are retired? Maybe sell her IRA funds and buy more of my IRA funds? Technically it would still be my individual IRA account, but it would combine the funds of our two accounts into one. As long as we didn't exceed the annual contribution limit and one of us was still earning enough income to qualify for the contribution I would think it would work. Since they're both Roth accounts I wouldn't think any taxes would be involved?

Of course, there's probably no point to this. It would probably be easier just to withdraw from her account first (assuming her balance was smaller). But I'm always looking for ways to simplify whenever possible.

Without avoiding a taxable event? Unlikely. Even at death the IRA's beneficiaries are subject to tax on the money.
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Old 02-21-2019, 11:18 AM   #11
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you have to have earned income to contribute to a Roth. Withdrawing $7K from your wife's Roth doesn't count as earned income. It's not at all comparable to earning $7K from a part-time job.
Yes, only earned income can be contributed to a Roth (7K limit if over 50 years old as of 2019).

However, if I earn 7K from a part-time job and contribute all of that to my Roth, and my wife withdraws 7K from her Roth at the same time, isn't that effectively the same end result? Her Roth would decline by 7K, mine would increase by 7K, and we would have 7K from my part time job. Effectively we would have moved 7K from her Roth to mine.

I doubt there would be any advantage to doing this. For example, it would be easier just to withdraw 35K from her Roth than to spend five years trying to move the funds to my Roth. Assuming I even had five years of 7K part time income.

Again, just curious. It's fun to think this stuff through.
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Old 02-21-2019, 11:57 AM   #12
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What is the point of draining down her Roth and making her beholden to you?
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Old 02-21-2019, 12:00 PM   #13
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... Now with two Roth's in the family, I started scheming for the future.

I know IRA's are for individuals, but is there any way to combine the assets once we are retired? ....
Yes, of course. One of you can die.
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Old 02-21-2019, 12:45 PM   #14
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....Now with two Roth's in the family, I started scheming for the future. ....
Find a hobby.... you obviously have too much time on your hands.
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Old 02-21-2019, 02:21 PM   #15
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I have treated our tIRA and Roth IRA accounts as if they were jointly owned, but other than contributions/withdrawals/death of a spouse I don't think you can actually combine them.

I Roth converted all of my tIRA accounts first, since I'm older and had higher/earlier RMD's. Now we're working on DW's tIRA Roth conversions and I have no tIRA. Different RMD levels would be one reason to favor one spouse's tIRA over another's.

When we start Roth withdrawals I'll take mine first just because DW will probably outlive me and it seems like it would be a little easier if the remaining accounts were hers. I can't think of any other reason to favor one Roth over another. However, we will try to drain both Health Savings Accounts before we withdraw from the Roths, just because the HSA's come with restrictions that would be nice to be done with early.
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Old 02-21-2019, 02:39 PM   #16
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Without avoiding a taxable event? Unlikely. Even at death the IRA's beneficiaries are subject to tax on the money.
I think this is generally false in the case of Roth IRAs, which is what the OP was talking about. Beneficiaries have to drain the account within 5 years or start RMDs based on their life expectancy, but the distributions are federally tax free as far as I know.

I suppose the Roth IRA's value would be includeable in the estate for estate tax purposes. And some states might have an inheritance tax. But my state doesn't, and currently the value of all of the estates in my family are under the current estate tax limit (~$11M per person at the moment IIRC).

Your statement is generally true if we're talking about traditional IRAs.
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Old 02-21-2019, 02:41 PM   #17
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I think this is generally false in the case of Roth IRAs, which is what the OP was talking about. Beneficiaries have to drain the account within 5 years or start RMDs based on their life expectancy, but the distributions are federally tax free as far as I know.

I suppose the Roth IRA's value would be includeable in the estate for estate tax purposes. And some states might have an inheritance tax. But my state doesn't, and currently the value of all of the estates in my family are under the current estate tax limit (~$11M per person at the moment IIRC).

Your statement is generally true if we're talking about traditional IRAs.

Aha, for some reason my brain confused taxable IRA with non-taxable Roth.
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FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 02-21-2019, 02:44 PM   #18
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i doubt there would be any advantage to doing this..

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Old 02-21-2019, 08:49 PM   #19
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However, if I earn 7K from a part-time job and contribute all of that to my Roth, and my wife withdraws 7K from her Roth at the same time, isn't that effectively the same end result? Her Roth would decline by 7K, mine would increase by 7K, and we would have 7K from my part time job. Effectively we would have moved 7K from her Roth to mine.
What benefits would you both gain from going through that process?
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Old 02-21-2019, 09:56 PM   #20
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In-marriage QDRO, but probably pricey as it would need to be professionally done. I googled this a while back, as my 401k is awful, and DH's is very good.
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