Deductible TIRA
I am 54 years old.
I work and all my income comes from my employer via W2 income.
I do not contribute to my employer’s 401k.
My employer makes no pension contribution for me.
My husband and I a combined AGI of more than $200,000.
My husband is self employed and contributes to a SEP via his schedule C income.
Question: Can I make a fully deductible TIRA contribution for 2016 of $6,500?
Permalink Submitted by Alan - IRA critic on Tue, 2016-11-01 17:15
No. Due to your husband’s participation your deduction is fully phased out between 184 and 194k of modified AGI. Modified AGI is either the same or higher than actual AGI from your tax return. But note that your husband is considered an active SEP participant in the year he makes his contribution, regardless of which year it is for. For example, if he does not make a contribution in 2016 for either 2015 or 2016, then you could deduct a 2016 contribution. The active participant rules are explained here: http://retirementdictionary.com/definitions/activeparticipant
Permalink Submitted by Robert Wright on Tue, 2016-11-01 17:48
So by contributing to a SEP plan, my husband is considered “covered” by a pensoin plan?
Permalink Submitted by Alan - IRA critic on Tue, 2016-11-01 18:15
Yes, that is why you cannot deduct your TIRA contribution. Your modified AGI is also over the Roth IRA income limit for regular contributions. If you want the tax break from pre tax contributions, you could contribute to your 401k, since not contributing is still not enabling you to make a deductible TIRA contribution because of his SEP contributions and your joint income.
Permalink Submitted by Robert Wright on Tue, 2016-11-01 18:35
Thanks Alan.