Friday, January 05, 2007

Sigh of Relief - Roth IRA limits?

After a bit of thinking, I was concerned that there was going to be some sort of conflict when I had the question cross my mind about someone -- they are likely going to be getting a significant contribution from employer-side with regard to SEP this year. However, they also contribute to a ROTH IRA individually, but the question/concern was: will the high employer-contribution actually reduce the allowed contribution to the individual's ROTH IRA account?

Thank goodness for the internet. Since after reviewing the correct publications on the IRS website, it is clear. http://www.irs.gov/publications/p590/ch02.html -- this states: " If contributions are made to both Roth IRAs and traditional IRAs established for your benefit, your contribution limit for Roth IRAs generally is the same as your limit would be if contributions were made only to Roth IRAs, but then reduced by all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs."

And that, my friends is the game, set, match for that question. The employer contributions don't matter and the Roth contributions may continue. , unchallenged.


2 comments:

taxxcpa said...

He can only contribute to a Roth IRA if his AGI is less than $100,000--and less if filing separately.

EasyChange said...

Yes, thankfully, he falls below that limit as well. :)