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Why are Roth IRA income limits less than half for married couples?
Old 09-16-2007, 09:39 PM   #1
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Why are Roth IRA income limits less than half for married couples?

This may be a question with no answer but I'll pose it anyway...if you are single, your eligibility to contribute to a Roth IRA begins to phase out once your adjusted gross income exceeds $99k for 2007. However, the phase out begins at $156k if filing as married. Can anyone explain the logic behind why the limit for married couples is less than 2x the single limit? It doesn't seem equitable (although this is the tax code we're talking about, granted).

Let's say that we have two people who each have an AGI of $85k in 2007. If they are single or dating, they are each eligibile to put $4k in a Roth. Then one day, they get married. Now, their AGI is over the phaseout limit ($166k) and they can't contribute anything. How is this fair? Am I missing something?
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Old 09-16-2007, 10:26 PM   #2
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It is part of the marriage penalty. It took them forever to get it fixed on the deductions because two singles used to be more than a married filing jointly.
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Old 09-17-2007, 01:03 AM   #3
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Go one step further. If you are single and want to convert your TIRA to a ROTH your MAGI must be under $100K. If you are a married couple and want to convert your TIRA to a ROTH your MAGI must be under $100K. This does not seem fair to the married couple.
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Old 09-17-2007, 02:33 AM   #4
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Here is a brief article from Vanguard. The Rollover limit based on income will change in 2010.

https://flagship.vanguard.com/VGApp/...142007_ALL.jsp
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Old 09-17-2007, 07:20 AM   #5
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Yet another reason why marriage should be a personal and/or religious commitment, and the government should not be involved! At least, this is my opinion. Others may differ on that.
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Old 09-17-2007, 10:46 AM   #6
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Perfect timing, chinaco - thanks!

Quote:
Originally Posted by chinaco View Post
Here is a brief article from Vanguard. The Rollover limit based on income will change in 2010.

https://flagship.vanguard.com/VGApp/...142007_ALL.jsp
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Old 09-17-2007, 07:15 PM   #7
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Then one day, they get married. Now, their AGI is over the phaseout limit ($166k) and they can't contribute anything. How is this fair?
Were you under the impression that the tax code is a well reasoned undertaking ?

Silly Rabbit, there is no logic to this madness nor is there any justice in the jungle...

You will drive yourself to madness trying to decipher the logic used for such schemes.

give up ! you will be assimilated !
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Old 09-17-2007, 08:14 PM   #8
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Quote:
Originally Posted by soupcxan View Post
...if you are single, your eligibility to contribute to a Roth IRA begins to phase out once your adjusted gross income exceeds $99k for 2007. However, the phase out begins at $156k if filing as married. Can anyone explain the logic behind why the limit for married couples is less than 2x the single limit? It doesn't seem equitable...
The purpose is in fact to be equitable in a macro sense.

Unless the IRC is made even more complex, there is no way to determine if a married couple earns there income evenly or if one spouse earns all the income, or by any other split.

As somewhat of a compromise, Congress established a pro-rata benefit for IRA contributions based on this principle.
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