Background:
– Husband and Wife client.
– Have a basis from non-deductible IRA contributions in 2017 of 950/each (1,900 total).
– 2018 Contributions as follows: Wife at 3,900…Husband at 1,400.
– Based on fairly concrete income estimates, their calculated deductible contributions for 2018 should be $2,640 each meaning the Wife is OVER by 1,260 and the Husband is UNDER by 1,240.
– Wife also runs her own business on the side but does not generate much income (less than 5k/year).
– Since contributions have been made, market value of the accounts has dropped by 11% for Wife and 8% for Husband. (2018 Market performance as 2017 contributions were made in March of ’18).

What I’m mostly trying to figure out here is what’s the best course of action? I generally prefer to have the IRAs be clean and solely deductible contributions (unless of course, we’re using them solely for back-door Roth contributions).

I’ve considered trying to open up a SoloK (TD prototype document which allows for Roth) for both Husband and Wife based on Wife’s side business to direct existing IRA balances in though I’m not sure if I could split the account between Roth and standard once they’re there.

Another option seems to be to withdraw the “excess” contribution of 1,260 from Wife’s IRA for 2018. But after market performance that would come down to $1,121 (loss of $139).

What might I be missing or might be the best course of action? Thank you!!