Help with 2016 Roth contribution as a resident

[Eimaise]

I have a couple of beginner's question about Roth IRA contributions. I am a resident right now.

I opened up a Vanguard Roth IRA for my wife in 2016 by rolling over her old 403b from her old job and then I made the full $5500 contribution into that account on 12/28/16.

I want to open up a Roth in my name now as well.

Question 1: If I open a Roth before 4/17/17 (the 2016 deadline) in my name and make a full $5500 contribution to it, will that then count as my 2016 contribution? Can I then turn around and make a second $5500 contribution a few days later and it would count as a 2017 contribution?

Question 2: Can I make any contributions to my wife's Roth IRA account before 4/17/17? Or am I already maxed out for this contribution year?

Question 3: How does it work if I file my 2016 tax return to the IRS before April 17th (which I always do) and then make a 2016 contribution to a Roth IRA after filing? Would that mess anything up with my tax return?

[DMFA]

1: yes. It will ask you which tax year for which you want to contribute.

2: you only get to contribute $5,500 per tax year. If she did that for 2016, then that's all. However, she can make her 2017 contribution now.

3: shouldn't be a problem, since you report current and prior year's contributions when you file. I've done this before.

This is all assuming you file taxes as married filing jointly with a combined AGI < $184,000. If you're MFS or your income is higher, you're not eligible for direct Roth contributions and have to "backdoor" by doing a non-deductible traditional contribution and converting it to Roth.

[DMFA]

And btw, assuming it's not a Roth 403b, you do know you owe taxes on that conversion, right?

[Eimaise]

Thank you for your help. Sounds good.

Yes, when I made the conversion I asked for advice on this forum and we figured it was right time to make the conversion. I think the tax burden will be pretty small. We will see!

[jfoxcpacfp]

Eimaise wrote:

Question 1: If I open a Roth before 4/17/17 (the 2016 deadline) in my name and make a full $5500 contribution to it, will that then count as my 2016 contribution? Can I then turn around and make a second $5500 contribution a few days later and it would count as a 2017 contribution?

Click to expand...

@DMFA has given you correct answers and I just have a small correction. The filing deadline is 4/18/17 this year. Don't wait until the last minute to open the account in order to make sure all is processed. You can even make your 2017 contribution before you make your 2016 contribution if you want, or you can make them at the same time and designate between the 2 years.