contribution eligibility
I have a client who’s joint income is 250k. Her employer doesn’t offer a retirement plan and her husband has a employer sponsored pension that he makes no contribution towards. Is the plan considered a qualified plan regarding traditional IRA eligibility or because he doesn’t make contributions can they open a traditional IRA. Thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2015-10-12 19:59
If husband’s employer has a defined benefit plan, then his W-2 will have the Retirement Plan boxed checked and he is considered an active participant. The joint MAGI figure of 183k begins the phaseout of either Roth contributions for either of them OR a deductible TIRA contribution for HER even though she is NOT an active participant. And he cannot make a deductible contribution either. It appears that a non deductible TIRA contribution is the only contribution either can make, but if they do NOT have a pre tax TIRA balance they could make those non deductible contributions and then convert them tax free to Roth IRAs. Finally, note that MAGI could be much less than 250k in some cases, but would probably still be too high for the 183k to 193k phaseout range.