High income couple and IRA’s

Submitted by alberto vega on Fri, 2019-11-29 19:17

In 2019 Wife age 49, Husband age 65, Child age 11. W income $ 150,000 salary plus $400,000 from S corp. H $ 12,000 salary, plus $ 300,000 interest/dividend income. About $ 30,000 itemized deductions. W contributes via a SIMPLE IRA from her S corp (W puts in the max $13,000; and S corp the max 3% which is about $4500 for her). H no contribution to retirement plans at all
1. Can they benefit from a traditional IRA contribution. If so who, W or H or both? Any contribution deductible?
2. Can they make a ROTH IRA contribution.( which is non-deductible). If so who W or H or both?
3. Or their only benefit of a contribution would be just the tax free accumulation of earnings and, in which, ROTH or traditional IRA. And if so what would be the maximum contribution each could make in 2019.



Submitted by Bruce Steiner on Fri, 2019-11-29 20:00

  • Does W control the corporation where she works?  If so, would a 401(k)/profit sharing plan make sense?
  • Is H eligible to contribute to a 401(k) plan where he works?
  • They could make nondeductible contributions to traditional IRAs and then do backdoor Roth conversions.  If they already have traditional IRAs, they would have to either roll them into 401(k) or other employer plans, or convert them to Roth IRAs as well, to avoid the pro rata apportionment of basis for their nondeductible contributions.
  • Bruce Steiner

Submitted by alberto vega on Fri, 2019-11-29 22:00

W owns S corp 100%; no traditional IRA nor Roth, only SIMPLE IRA. No 401k; do not want 401k  becuause has to include additional 7 employeesH works part time; no 401k where he works. No  traditional IRA nor ROTHIF H and W do not have other IRA—- only W has SIMPLE IRA; then could do $6000 TIRA contribution for W and $7000 for H? Therafter then convert to Roth IRA for each in 2019 and pay no tax in 2019 on this conversion?

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