Traditional Tax Deductible IRA
Just 2x checking; married couple have an MAGI that exceed $200K/yr. and both are participating in their company’s retirement plan. Are they unable to make a tax deductible IRA contribution to a Traditional IRA?
Just 2x checking; married couple have an MAGI that exceed $200K/yr. and both are participating in their company’s retirement plan. Are they unable to make a tax deductible IRA contribution to a Traditional IRA?
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Permalink Submitted by Alan - IRA critic on Thu, 2017-03-23 16:36
The MAGI limit for any IRA deduction for 2016 is 118k for covered participants, so their income is much too high for a deduction. 200k is also too high for a Roth contribution if MAGI has been figured correctly. For any spouse that does not already have a pre tax TIRA balance, they could do a back door Roth (non deductible TIRA contribution and conversion) to simulate a regular Roth contribution.
Permalink Submitted by Anthony Zalesky on Fri, 2017-03-24 14:47
Alan, thanks for your help. What if one of the spouses is in a union pension plan sponsored by his employer and he, as an employee, does not salary defer or contribute anything toward the pension plan. Would they be allowed to contribute then to a tax deductible IRA and if so what are the MAGI limits?
Permalink Submitted by Alan - IRA critic on Fri, 2017-03-24 15:49
The union pension plan receives employer contributions and Box 13 of his W-2 would be checked to show him as a retirement plan participant. His W-2 should be checked for Box 13. If he was not a participant but his spouse was, then the MAGI limit for him to take an IRA deduction would be the same as that for a Roth IRA contribution, ie 184k-194k phaseout range.