SIMPLE IRA plus traditional IRA contributions?
My client participates in his company SIMPLE IRA. Can he also contribute to his traditional IRA? Can his non-working spouse?
My client participates in his company SIMPLE IRA. Can he also contribute to his traditional IRA? Can his non-working spouse?
Permalink Submitted by Alan - IRA critic on Mon, 2021-01-04 20:35
He can contribute to his TIRA, and his spouse can also make a spousal contribution using his earned income (assuming he has enough to fund both contributions), however his SIMPLE IRA participation puts a cap on his MAGI for purposes of deducting the TIRA contribution (one or both spouses). If MAGI is too high to deduct TIRA contributions then Plan B would be to make Roth contributions instead. Roth contributions also have a MAGI limit, but it is higher for his contribution than the TIRA deduction MAGI limit.
If it turns out that MAGI is too high for him to make a deductible contribution, because his spouse will have a higher limit (same as the Roth limit) it may be possible for her to deduct her spousal TIRA contribution while he cannot, and he may be able to make the Roth contribution. Therefore, their joint MAGI needs to be determined before knowing which option is the most beneficial of the allowed choices.