Are there any limitations on who can contribute to a Backdoor Roth?

[pierre]

Hello All,

I was speaking with a financial adviser the other day about setting up a 401k through my wife's work. We started talking about other retirement accounts and I mentioned that we will be contributing to a backdoor roth. First, he had never heard this term before. Second he started quoting some IRS form (I don't recall which one) making it sound like we were not eligible to contribute because we have other options available, i.e. a 401k, with the caveat that he is not a CPA and we should check with our accountant.

We plan on filing 2015 taxes MFS due to student loan/IBR implications.

Do you know of any situation in which one would NOT be able to contribute to a backdoor roth?

Thanks!

Pierre

[Zaphod]

You need a new planner or none at all.

[pierre]

I don't generally use a financial planner thanks to this site and bogleheads. This was a "free resource" provided through her employer.

The conversation just made me second guess myself.

[jfoxcpacfp]

You were right, he was wrong. Even though you are married filing separately, you can still contribute to a nondeductible IRA and convert to a Roth. Be sure to file your form 8606. To answer your question, however, you are limited by the amount of earned income, i.e. must have at least $5,500 each to max out. Not an issue with you, but wanted to clarify for others.

Scary that he had never heard of a back-door Roth.

[Joseph]

jfoxcpacfp wrote:

To answer your question, however, you are limited by the amount of earned income, i.e. must have at least $5,500 each to max out.

Click to expand...

Johanna, you stumbled a bit on answering this one. A married couple does not need $5500 each.  That is incorrect.  A spousal IRA can be made without any earned income, just the breadwinner.

[pierre]

Thank you for the replies. Good to know we are doing it right

[jfoxcpacfp]

Joseph wrote:

jfoxcpacfp wrote:

To answer your question, however, you are limited by the amount of earned income, i.e. must have at least $5,500 each to max out. 

Click to expand…

Johanna, you stumbled a bit on answering this one. A married couple does not need $5500 each.  That is incorrect.  A spousal IRA can be made without any earned income, just the breadwinner.

Click to expand...

Joseph, I apologize for not being clear in my answer. I meant that a married couple needed to have enough total income for a $5,500 contribution to each account, not that each person had to earn $5,500. Sorry for the confusion.