Question: I have a SIMPLE IRA for my small business and my wife and I will contribute $16,000 each for 2019. We are both approaching our mid-50s and our adjusted gross income is around $200,000. We file married filing jointly. We both have a Roth IRA that we stopped contributing after opening the SIMPLE IRA. Can we contribute $7,000 dollars each to the Roth IRA too after maxing out the SIMPLE IRA first?

Answer: For Roth IRA contributions, the key figure is modified adjusted gross income, or MAGI. MAGI is calculated from AGI, but with a few items added back in, says Ethan Gilbert, a certified financial planner Rockbridge Investment Management.

It's best to check with your tax preparer to see what your MAGI is, but there's a good chance it's the same as your AGI or very close to it, says Gilbert.

If you report a MAGI less than $193,000, you each can contribute $7,000 to a Roth IRA, says Gilbert. "Your ability to contribute, however, phases out from $193,000 to $203,000 and above $203,000 you can contribute nothing," he says. "Assuming your MAGI is exactly $200,000, you will each be able to contribute $2,100 to your Roth IRA for this year."

However, you may be able to contribute more through a process called a 'backdoor Roth IRA,'" says Gilbert. "Assuming you don't have pre-tax IRA money, backdoor Roth IRAs are a way for high-income earners to contribute to a Roth IRA when they would otherwise be ineligible."

The process is as follows:

    Make a non-deductible, after-tax contribution to a traditional IRA.

    Immediately convert the money from the traditional IRA into the Roth IRA.

    File form 8606 when you do your taxes next year.

    If you have money in a pre-tax IRA, and you like your investment options in your SIMPLE IRA, Gilbert says you may want to roll the traditional IRA into the SIMPLE IRA, which is allowed if the SIMPLE IRA has been open for two years. Otherwise, he says, "the backdoor Roth IRA likely doesn't make sense because of the pre-tax IRA money."

    In general, Gilbert says getting familiar with backdoor Roth IRA contributions is a good idea as your income will hopefully continue to increase prohibiting Roth IRA contributions in future years unless you do the backdoor process.

    Read more from the IRS:

    Got questions about the new tax law, Social Security, retirement and/or investments? Email Robert.Powell@TheStreet.com.

    Question: I have a SIMPLE IRA for my small business and my wife and I will contribute $16,000 each for 2019. We are both approaching our mid-50s and our adjusted gross income is around $200,000. We file married filing jointly. We both have a Roth IRA that we stopped contributing after opening the SIMPLE IRA. Can we contribute $7,000 dollars each to the Roth IRA too after maxing out the SIMPLE IRA first?

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