Hello,

I am a recent college graduate and I don't have much experience with IRA's. While I was able to put a lot of money into Mutual Funds as I was growing up, this is the first year I have money that I know I will not need for school, or whatever life throws my way. I wanted to convert $2000 of my Janus Mutual Funds into a Roth IRA, but when my dad did my taxes for me, he found that I was only able to get a regular IRA. Can anyone tell me why?

Here are my circumstances, I was in school until May of 1999 and I had a paid internship from Jan. 1999-July 1999 where I earned about $6,000. I earned an additional $1,850 at a job at my university, and about $1,600 from Nov 1999-Dec 1999. I have no student loans, everything has been paid through scholarship or part-time jobs. I was married in August, the marriage isn't going well so we are filing our taxes married filed seperately. He made about $17,000 last year. So all in all, I estimate that I made about $9,500 last year, plus whatever I made from my mutual funds. With capital gains taxes I'll have to pay about $700 in taxes, but if I do the regular IRA I will get about $300 of that back. My question is-what is preventing me from getting a Roth IRA? This is what I would prefer. Thank you for your help!!

I believe the reason you may not be eligible to contribute to a Roth is your income and the fact you are married filing separately.

The AGI limit for MFS is only $10,000, once you exceed that amount you are no longer eligible to contribute to a Roth. If you were filing as a single taxpayer your income limits would be $110,000 or married filing jointly the limit is $160,000. This doesn't make a lot of sense and probably isn't fair, but those are the rules.

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Daniel Anderegg, CLU,ChFC

The above MFS limits mean you either must just squeek under the 10K , or file jointly and you can put 2K each into a Roth.

Lets say you are over the 10K and filing jointly is a non-starter, then you can go the regular IRA route and perhaps next year when your income is still low you may be able to convert the first IRA amount to a Roth.