Based on the key parts of the question:
- A. Martha doesn't have a retirement plan at work.
- B. Martha makes too much to deduct the traditional IRA contribution
- C. Martha makes too much money to participate in a Roth IRA.
From these three statements we know:
From A we know Martha has no 401(k) or 401(k) like retirement plan at work, she also doesn't have a pension plan.
According to the IRS
You’re covered by an employer retirement plan for a tax year if your
employer (or your spouse’s employer) has a:
Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were
allocated to your account for the plan year ending with or within the
IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or
within the tax year; or
Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the
plan year ending with or within the tax year.
Box 13 on the Form W-2 you receive from your employer should contain a
check in the “Retirement plan” box if you are covered. If you are
still not certain, check with your (or your spouse’s) employer.
But from B we know that Martha makes too much money to deduct the IRA contribution, but that implies that Martha's spouse has a retirement plan.
According to the IRS in regards to can a person deduct their IRA contribution in 2019.
From C we know Martha can't make a Roth contribution.
Again from the IRS regarding Roth contributions. Martha is either single and has to have an MAGI above 137K, or MFJ and they have a MAGI above 203K or MFS and have a more complex situation.
Going forward Martha has several options.
- If Martha wants to participate in a Roth IRA then Martha should look at the back door Roth, it won't make the contribution deductible but It will allow the future growth to be tax free.
- If Martha's spouse has a 401(K) plan make sure those contributions are maximized
- If Martha or her spouse has a high deductible health plan and access to a HSA they can make the maximum contributions to the HSA but then not spend the money in the plan. Many HSA plans allow you to invest in options similar to a 401K and once you reach retirement age the penalty for non-medical use disappears
- If Martha or her spouse have a child they can contribute money to a 529 plan. That isn't deductible on the federal tax forms, but the growth is tax free if used for qualified expenses. It also may save money on state taxes.