Someone, married who makes over 250k filing jointly has no 401k offered at work. They are a salaried employee. Are they and their spouse able to contribute to a trad or Roth IRA in this instance? Or does the income limit still apply?
Any other options for them? SEP? I don’t think they would qualify. And maybe just looking at joint investment account.
Thanks for your input
The eligibility of a married individual who is not an active participant in a workplace retirement plan to be able to deduct a contribution to a traditional IRA is affected by whether or not the individual’s spouse is an active participant whether filing jointly or separately (even more when filing separately the filing jointly because the MAGI limit is far lower).
Thank you, appreciate the info. One more thing to add to it, the person contributed to a 401k at their old job for January of this year then left for new job with no 401k or any type of retirement plan. Would that make them unable to qualify?
Thank you, appreciate the info. One more thing to add to it, the person contributed to a 401k at their old job for January of this year then left for new job with no 401k or any type of retirement plan. Would that make them unable to qualify?
Being covered by a workplace retirement plan at any time during the year makes the individual covered for the year. With the MAGI being over $206,000, neither the individual nor the individual’s spouse is eligible for a deduction for a traditional IRA contribution made for 2020 but they could make nondeductible traditional IRA contributions.
Permalink Submitted by Alan - IRA critic on Thu, 2021-04-01 22:27
The MAGI limit still applies for Roth IRA contributions, but if neither the person nor their spouse if filing jointly participated in an employer plan (which includes a DB plan), a TIRA contribution could be deducted. If they do not have a pre tax IRA, a back door Roth is also a possibility as there are no income limits for non deductible TIRA contributions. A SEP or solo K can only be contributed to if the person has a side job with SE income. Last option is taxable account investment.