AGI Limits for Traditional IRA Spousal Contribution
For 2009, a traditional IRA contribution is deductible for a non-working spouse, even if the working spouse is covered by an employer sponsored retirement plan so long as the MFJ AGI is less than $166,000. What would happen under the circumstance that a Roth conversion takes place in 2009 and the taxable amount converted forces the AGI above $176,000? Would this mean the spousal TIRA contribution amount is not deductible? Or, is the Roth conversion income ignored in determing the AGI for deductibility?
Thank you.
Bob
Permalink Submitted by Alan Spross on Fri, 2009-09-04 02:52
Good question. This question shows how the MAGI definition for Roth purposes differs from the MAGI definition for TIRA purposes. Conversions are disregarded in determining MAGI for Roth regular or conversion contributions, but for TIRA purposes the conversion income DOES count. Therefore, if the conversion drives MAGI above 176,000, the ability to deduct any of the spousal TIRA contribution is eliminated. The appropriate MAGI chart is on p 17 of Pub 590.
Permalink Submitted by Robert Dyar on Fri, 2009-09-04 16:05
Alan,
Many thanks for the prompt reply.
Bob