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Why are Roth IRA income limits less than half for married couples?
09-16-2007, 08:39 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,447
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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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09-16-2007, 09:26 PM
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#2
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Moderator
Join Date: Dec 2005
Posts: 10,123
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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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09-17-2007, 12:03 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
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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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09-17-2007, 06:20 AM
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#5
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 43,282
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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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- - Marcus Aurelius
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09-17-2007, 09:46 AM
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#6
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Dryer sheet wannabe
Join Date: May 2007
Posts: 15
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Perfect timing, chinaco - thanks!
 Quote:
Originally Posted by chinaco
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09-17-2007, 06:15 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 4,371
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Quote:
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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?
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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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09-17-2007, 07:14 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2004
Posts: 2,670
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Quote:
Originally Posted by soupcxan
...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...
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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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