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Spousal IRA Question
Old 11-24-2018, 11:43 AM   #1
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Spousal IRA Question

So I think I understand this but I am sure the brain trust here at ER.org can confirm or deny

If my spouse has zero earned income for 2018, do I have it correct that I can contribute to her EXISTING Roth IRA as long as

1. We are filing jointly
2. We are under the phase out MAGI (189K - 199K for 2018)
3. My earned income is more then 11K ($5,500 for both or our Roths)

I am pretty sure that is what I have read but I just want to make sure that there is not something I am missing. I see it refereed to a s spousal Roth/IRA but it seems that is just a term and her existing Roth is where would make the contribution.
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Old 11-24-2018, 12:07 PM   #2
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Yes, if you meet the conditions you specified, then you can contribute to an existing (or new) Roth IRA that is held in her name. A "spousal IRA" is not a different type of retirement account or a separate account.
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Old 11-24-2018, 12:24 PM   #3
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You have it correctly. The only thing I add is that catch-up contributions of $1,000 are allowed for each spouse age 50 by December 31.

https://www.irs.gov/retirement-plans...-contributions
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Old 11-24-2018, 12:36 PM   #4
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OK, thanks for the confirmation!

One quick follow up........

When taxes are filed how does the IRS know the contribution was under the spousal rule? Is there just a box to check?
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Old 11-24-2018, 01:13 PM   #5
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If the money is going into a Roth IRA you don't report it on your tax return. No boxes to check.

If the IRS wants to know about it, they're going to have to take the 5498s sent to them by the Roth IRA custodian, add up the contributions for the two spouses and compare that number to whatever you reported as joint earned income on your 1040.
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Old 11-25-2018, 12:00 AM   #6
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OP - while correct that your Wife gets to put money into the ROTH ira as you earned enough for both contributions, it technically is her that puts it in, and not you.

I don't think people can put money into somebody else's IRA/ROTH IRA.
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Old 11-25-2018, 07:45 AM   #7
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OP - while correct that your Wife gets to put money into the ROTH ira as you earned enough for both contributions, it technically is her that puts it in, and not you.

I don't think people can put money into somebody else's IRA/ROTH IRA.
I did this for my daughter. I can gift her the $ and she has earned income so why not?
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Old 11-25-2018, 08:35 AM   #8
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I did this for my daughter. I can gift her the $ and she has earned income so why not?
I have done this also. I transferred the money to children's bank accounts, and they then contribute to their Roth IRA accounts, and report on their tax returns. To the eyes of Roth administrator, it is their contribution to their Roth account.

What is not clear to me, is can you directly contribute to another person's Roth IRA from your own bank account, and be counted on their tax returns?
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Old 11-25-2018, 09:13 AM   #9
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I have done this also. I transferred the money to children's bank accounts, and they then contribute to their Roth IRA accounts, and report on their tax returns. To the eyes of Roth administrator, it is their contribution to their Roth account.

What is not clear to me, is can you directly contribute to another person's Roth IRA from your own bank account, and be counted on their tax returns?
Roth IRA contributions are not reported on anyone's tax returns, so there's no law about who can make a deposit, only about the maximum amount of said deposit. (At least there's nothing in the tax code, there may be something in the banking regulations.)

Each custodian probably has their own processes for accepting money. I can tell you the rules at Vanguard because I've just gone through this with my daughter. For an electronic funds transfer, they require that either 1) the Roth IRA account owner is also an owner on the account the contribution is coming from; or 2) both account owners fill out an authorization form and have notarized signatures on file.

We were not going to pay for notaries, and I was curious about whether they'd accept a paper check from me given that they wouldn't take an electronic contribution. So, I wrote a check from my account to Vanguard and DD sent it in with a deposit form she signed. We will find out in the next few days whether they accept it. If they don't, I'll just write a check to DD and she'll deposit it and do the transfer to Vanguard herself.
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Old 11-25-2018, 09:27 AM   #10
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In Fidelity, I just linked DW's account to our joint bank account, put the money in the bank account, DW logs into Fidelity and pulls her contribution from the bank.
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Old 11-25-2018, 10:14 AM   #11
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We are joint ownership in VG accounts and checking/savings accounts. Does the IRS really check all this. What if it's a gift? For all the freakin money laundering that goes on and has gone on for years and years and they're going to nit pick about where the money came from for a Roth contribution?
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Old 11-25-2018, 11:01 AM   #12
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We are joint ownership in VG accounts and checking/savings accounts. Does the IRS really check all this. What if it's a gift? For all the freakin money laundering that goes on and has gone on for years and years and they're going to nit pick about where the money came from for a Roth contribution?
The rules are that as a couple, you can't contribute more than you earn to your IRAs. As long as you actually earn money, the IRS doesn't care whether you also got a gift and put that into your Roth IRA instead of the money you earned. The actual source of the contribution does not matter at all.

Now, whether they would catch you if you didn't earn any money and still put some into a Roth IRA is hard to say. They definitely get all the data to do that calculation from your IRA custodian and your 1040, but who knows if they actually do it or not.
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Old 11-25-2018, 04:05 PM   #13
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Roth IRA contributions are not reported on anyone's tax returns, so there's no law about who can make a deposit, only about the maximum amount of said deposit. (At least there's nothing in the tax code, there may be something in the banking regulations.)

Each custodian probably has their own processes for accepting money. I can tell you the rules at Vanguard because I've just gone through this with my daughter. For an electronic funds transfer, they require that either 1) the Roth IRA account owner is also an owner on the account the contribution is coming from; or 2) both account owners fill out an authorization form and have notarized signatures on file.

We were not going to pay for notaries, and I was curious about whether they'd accept a paper check from me given that they wouldn't take an electronic contribution. So, I wrote a check from my account to Vanguard and DD sent it in with a deposit form she signed. We will find out in the next few days whether they accept it. If they don't, I'll just write a check to DD and she'll deposit it and do the transfer to Vanguard herself.
A good test of the alertness of Vanguard.
Of course won't you be mad if they do accept it, and then 6 months from now (past IRS time limits) disallow it and reverse the contribution...
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