Deceased Spousal Traditional IRA contribution after death
Hello. I have a client who was a widow in 2008, and she will file a Jt tax return. She had taxable w-2 wages of rougly $50,000, and her spouse and her both had Social Security income of about $20,000 combined. She was elgilible to make 401k contributions in 2008, but her husband was a non-working spouse. Her husband deceased, but did not make an IRA contribution, and all his IRAs were rolled over to hers using a spousal rollover.
My question is:
Can she make a 2008 Traditional IRA deductible contribution to her own traditional IRA because she will be filing a jt return, and because her deceased husband was not working but didint make a 2008 contribution while he was alive? ( the client died in Sept 2008)?
-Sean Berger
Permalink Submitted by Alan Spross on Fri, 2009-03-06 02:45
She can certainly make an IRA contribution for 2008 since she had her own taxable compensation. Your concern is whether is can be deducted. Check her W 2 to see if the retirement box is checked, as there are some variables used to determine whether or not she was an active plan participant. If the box is blank, she can deduct her contribution made for 2008 prior to 4/15/2009. If the box is checked, then the amount of modified AGI used to determine the extent of an IRA deduction requires the use of Appendix B in Pub 590 because she received SS income. At this point, the use of tax software is recommended to determine the amount of the deduction available to avoid working through multiple worksheets.
The reason this becomes complex is because the IRA deduction and the amount of SS income included in AGI are mutually dependent, so must be computed in the proper order. The spouse’s death in this situation is immaterial to the IRA deduction question.
Permalink Submitted by mk foss on Fri, 2009-03-06 02:51
The other piece is that no contribution can be made for the deceased spouse even if he would have qualified to make a contribution if still alive.