2017 Traditional IRA contribution for client who had 401k for part of last year
Client would like to do a full $5,500 to her IRA designated as 2017 contribution. She briefly had a 401k in 2017 and employee and employer contributions were $1,750 and $1,300 respectively. Married filing jointly AGI around $150k combined and husband maxed out his 401k contributions in 2017. Is there any issue with a 2017 designation for her (prior to 4/18)? Also, I assume the IRA contribution deduction is phased out due to AGI?
Permalink Submitted by Alan - IRA critic on Thu, 2018-01-11 17:19
Yes, their joint modified AGI is too high for her to deduct the contribution, but low enough to allow for a Roth IRA contribution. Making a Roth contribution is preferable to making a non deductible TIRA contribution, and both spouses are eligible for a full Roth contribution as long as modified AGI is less than 186,000. Any contribution made between 1/1 and 4/17 should clearly be flagged for the year they apply to.