By Andy Ives, CFP®, AIF®
IRA Analyst
QUESTION:
Hello,
I am searching for confirmation that Roth SIMPLE IRA contributions are not limited by modified adjusted gross income (MAGI) in the same way that Roth IRA contributions are. This is not addressed in any of the articles or blogs I have read. I am setting up a SIMPLE plan as an employee-owner in 2026. I would prefer to make my deferrals into a Roth IRA, but have too much income to contribute. I hope you can help me clear this up!
Thank you,
Tracy
ANSWER:
Tracy,
While there are MAGI limits for making a Roth IRA contribution (in 2026, $242,000 – $252,000 for those married filing jointly; $153,000 – $168,000 for single filers), there are no such restrictions when contributing to the Roth portion of a work plan like a SIMPLE or 401(k). A person with a million-dollar salary could still make Roth contributions to a work plan. Additionally, IRS Publication 590-A includes a worksheet titled “Modified Adjusted Gross Income for Roth IRA Purposes.” There is no similar worksheet applicable to work plans, because MAGI has no impact on Roth contributions to workplace retirement plans.
QUESTION:
Your Q&A posts are excellent, down-to-earth and understandable – very much appreciated.
My question is about my mother-in-law who inherited a SEP IRA account a couple of years ago when her sister passed away (she was self-employed). Both were over age 73 at the time.
One advisor stated that my mother-in-law cannot satisfy the required minimum distribution (RMD) from that SEP IRA account with a qualified charitable distribution (QCD) and refuses to allow the distribution to be done as a QCD. Another advisor claims that she can use the QCD rules because the SEP IRA is not receiving contributions and has not for many years, so it is not an active SEP IRA. Please let me know your thoughts.
John
ANSWER:
John,
Thank you for the feedback about our Q&A Mailbag! In the scenario you outlined, advisor #2 is correct. Yes, a QCD can be done from that inherited SEP IRA. Your mother-in-law is over age 70½, so she is eligible to do a QCD. The fact that it is an inherited SEP IRA eliminates the possibility that any dollars are being contributed to it on behalf of your mother-in-law. This means the SEP IRA is inactive (as you described), which opens the door to allowing QCDs from that account.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/simple-plans-and-qualified-charitable-distributions-todays-slott-report-mailbag/
