Roth IRA + simple ira

Question

Hey there,

im married, filing jointly. I am 33 and max out my Roth IRA at $6500 each year. My employer decided last minute to open a SIMPLE IRA with a 3% match. I obviously want to contribute to take advantage of the match but I’m uncertain how this will affect me given that I already maxed out the Roth. I’m wondering if I can put 2,000 into the Simple IRA for 2023. I’m not positive but I believe this is based on household AGI. I think ours will be somewhere between $120k-$140k

thank you!

Rita · Answer

Amazing, thank you!

RustyL · Answer

Good question!

Because Roth IRA's are after-tax accounts, meaning the funds in the account have already been taxed, contributions to a Roth IRA are not deductible.  The flip side of that is you aren't taxed whatsoever, when you pull funds from the account.  Traditional IRA's are the opposite.  Deductible when you contribute (generally), but fully taxable when withdrawing funds.

However, if your AGI is $228k or more as a MFJ filer, you won't be able to contribute to a Roth IRA directly.  Instead, you would need to contribute to a Traditional IRA and then do a Backdoor Roth Conversion.

You mentioned earlier that your AGI should be lower than that though, so you should be fine.

Rita · Answer

Amazing Alex, thank you.

do you know if my Roth IRA contribution will still be fully deductible? I read that it may not be if AGI is over 129k but I can’t find further info about it.