Funding both 401k and IRA in same tax year
My wife worked half of 2013 and contributed to a company 401k plan that she rolled over into her traditional IRA. She didnt max out the 401k contribution but the amount she rolled over exceeded $5,500 so my question is can she still contribute to 2013 traditional IRA if so, how much?
Permalink Submitted by Alan - IRA critic on Wed, 2014-01-08 20:43
She can contribute, but because she was covered by an employer plan in 2013, there are income limits your joint modified AGI cannot exceed in order to be able to deduct that contribution. The deduction phases out at 95k-115k modified AGI. If she cannot deduct the contribution, the best option then becomes a Roth IRA contribution. There are also income limits for a Roth contribution and the phaseout range for them is 178k to 188k for 2013. If your income is too high for a direct Roth contribution, she can always make a non deductible TIRA contribution and then convert it to a Roth. There would be no tax on the conversion if she does not have any pre tax IRA balance.