Roth IRA + simple ira

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Rita
Rita Member Posts: 3 Newcomer
edited January 15 in Retirement Income

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!

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Answers

  • AlexO
    AlexO FreeTaxUSA Agent Posts: 74
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    Hello, Rita!

    That is a great question! I commend you for your diligent contributions to retirement savings accounts!

    You can contribute to the SIMPLE IRA and Roth IRA in the same year. If you file jointly, and your adjusted gross income (AGI) is below $218,000, you can max out your Roth IRA. Contributing to the SIMPLE IRA through your employer does not affect the amount of Roth IRA contributions you can make.

    For more information, see the IRS link below:

    https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023

  • Rita
    Rita Member Posts: 3 Newcomer
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    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.

  • RustyL
    RustyL FreeTaxUSA Agent Posts: 22
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    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
    Rita Member Posts: 3 Newcomer
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    Amazing, thank you!