Nothing is for sure except...you know what!

I’d love to say, “April Fool’s,” but I can’t! With all the retirement articles and discussions going on at Daniel’s Sweating the Big Stuff, I decided to get serious about researching my retirement options. I really like the benefits of an IRA, preferably a Roth IRA (it seems like a more flexible option for me.) However, after doing my homework and selecting the financial institution with whom I’d like to open an account, USAA, I found out I’m ineligible to open one (at least right now.) Here’s why; to open a Roth IRA, there are specific tax filing categories you must fit into:

  • Category A: Single filer claiming you made no more than $116,000 for the year
  • Category B: Married filing jointly claiming you made no more than $169,000 for the year
  • Category C: Married filing separately claiming you made between $0 and $10,000 for the entire year

Guess which category my husband and I fell into last tax season? Bingo! Category C: married filing separately (and we made more than the cap of $10,000). There are a few reasons why we have filed this way for the past few years, one of the reasons is partly due to owning our own business. However, in order for us to be eligible to open an IRA or Roth IRA, we must change our tax filing status. This year, after doing multiple calculations on our taxes, I realized we can file jointly without injuring ourselves too much. This means, within the next few weeks I should be able to open an IRA.

Once our taxes are processed, I am still choosing USAA for our IRA. They have a zero minimum balance to open one, but require a direct monthly debit to keep the fees minimal. I’ve been a member of USAA for years, I pay our renter’s insurance through them, and know they are a very reputable company. Hopefully this IRA fiasco will be resolved by the end of April, I’d like to get a jump on this year’s maximum IRA contribution limits!

Have any of you had this problem of ineligibility, married filing separately? Do you make too much for a Roth and have a traditional IRA instead? Are you able to max out your contributions every year?