Combined Roth IRA / deductible Trad IRA contribution limits
Hello. In 2007, my wife and I are filing a joint return with a MAGI of 163k, falling in the 2007 phaseout range of 156k – 166k. I am covered by a retirement plan at work (401k); she is not covered by a retirement plan at work.
Using IRS pub. 590, and the phaseout formula, I calculate that my wife can make a 2007 Roth IRA contribution of $1200. Similarly, I calculate that my wife can make a deductible contribution to a 2007 Traditional IRA of $1200.
My question is this: Can my wife make BOTH the $1200 Roth IRA contribution AND the $1200 deductible contribution to her Trad IRA, for a total of $2400, or is she limited to a sum total of $1200 between the two? I find Pub. 590 to be confusing on this particular point.
Thanks in advance for your assistance. I can’t find a direct reference to this anywhere.
Permalink Submitted by Alan Spross on Tue, 2008-02-12 22:11
She is limited to $1,200. The Pub 590 reference is on p 60. Also, note that the reduction of Roth contributions is triggered by making contributions to other IRAs except SEP and SIMPLE IRAs.
The net effect of this is that any excess contribution is deemed to first come from Roth contributions, so it is critical to preserve the Roth contribution that excess contributions be avoided up front.