IRA contributions deductibility
If the total taxable income for 2023 was $330,000, but $300,000 of that was from Roth conversion, and the remaining is from W-2 income from a part-time job for the husband, who is also covered in a 401(k) plan, but only contributed $2,300 in 2023. Question is can both husband and wife contribute $7,500 into each of their IRA accounts and take the deduction? I’ve read online, Roth conversion is not included in MAGI for IRA contribution deductibility, just want to confirm. Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2024-04-24 22:28
It’s too late for a 2023 contribution, as the deadline was 4/15/2024. Conversion income is subtracted from AGI in determining MAGI for regular Roth IRA contribution purposes, so both spouses could have made full regular Roth IRA contributions.
However, the conversion subtraction is not allowed for traditional IRA purposes, resulting in MAGI being too high to deduct any traditional IRA contributions. See Worksheet 1-1 in Pub 590A, which lists some subtractions, but conversions are not among them.
Husband could have converted 15,000 less or increased pre tax 401k contributions by that amount to replicate the reduced taxes that deductible TIRA contributions would have produced.