Brendan Willmann, CPA, EA, CFP®
Asheville: 828-348-8698
Cincinnati: 513-549-2736

Roth IRA Income Phase-Out

The Roth IRA can be a very attractive savings option for a number of reasons.  The primary benefit of the Roth IRA is the potential to avoid taxation on future qualified withdrawals, most notably in retirement.  This is particularly advantageous for taxpayers who are otherwise ineligible to make tax-deductible contributions to a Traditional IRA.  Unfortunately contributions to a Roth IRA are limited, if not prohibited for higher income filers.  The IRS uses the term “phase-out” to describe the limitations because the eligible contribution amount declines as a taxpayer moves through a predetermined income range.

For those filing jointly the range for 2012 is $173,000 to $183,000.  In 2013 the amount has increased to $178,000 to $188,000.

For single and head of household filers the range in 2012  is $110,000 – $125,000.  In 2013 the amount has increased to $112,000 – $127,000.

The figures listed above refer to a taxpayer’s modified adjusted gross income.  For many, modified adjusted gross income may be equivalent to adjusted gross income but be sure to consult a qualified tax advisor to review  the deductible portion of the following items that need to be added to adjusted gross income in order to calculate your modified adjusted gross income:

– Student loan interest

– Tuition and fees

– Traditional IRA contributions

– Domestic production activities

– Foreign earned income exclusion and/or housing exclusion

– Excludable qualified savings bond interest

– Excluded employer-provided adoption benefits

In addition, be aware that income from a Roth conversion is excluded from this definition of modified adjusted gross income.

If after calculating your modified adjusted gross income it is determined that your income is within the ranges listed you’ll need to consult the IRS instructions for determining the allowable partial contribution.



Please be sure to consult a qualified tax advisor to determine your eligibility.  The taxes and penalties associated with excess contributions are significant.


The articles presented on this blog are general in nature and should not be assumed to be applicable to your situation. In addition, tax law changes daily and the articles on this blog are not updated to reflect these changes. Anyone receiving any part of the information on this blog should not rely on or act or refrain from acting on the basis of any matter or information contained in this blog without seeking appropriate tax, legal or other professional advice.
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