SEP IRA and Traditional Spousal IRA
Female spouse is self-employed and contributed up to her maximum allowed in SEP IRA (<$1000) as the employer. Male spouse participates in his employer's 401(k) plan and contributed maximum $20,500 in 2022. MAGI exceeds TIRA deduction limits. Filing status MFJ.
Can they each contribute $6000 as non-deductible 2022 contributions to their individual TIRAs even though female spouse has just put <$1000 into her SEP IRA for 2022?
Thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2023-04-03 23:12
Yes, there are no restrictions for making ND contributions other than having the earned income to support it. While she can make such a contribution to her SEP IRA as a non SEP contribution, this can lead to errors and it would be preferable for her to make her contribution to a different IRA account than her SEP IRA. That said, if their joint MAGI is not too high for Roth contributions, they should make Roth contributions since a Roth contribution is always preferable to a ND TIRA contribution. Note that she is treated a a retirement plan participant for the year IN WHICH she makes a SEP contribution, not necessarily the year the SEP contribution is FOR.