My wife and I have an AGI somewhere between $120k - $140k depending on how much I make on side gigs throughout the year. We both started new full-time jobs within the last 12 months.
Here is the background:
We file jointly as "married"
Her new job does not offer retirement benefits of any kind. Her income is about $38k/y
My job has enrollment for a Traditional 401k with 3% match that I can enroll in starting in June. My income from this will be between $90-100k this year, plus I get some random 1099 work throughout the year.
I plan to contribute $729 per pay period to my employer sponsored 401k. Over a full year, this would put me at the $17,500 max contribution.
She has a few thousand sitting in a previous account from a previous employer. I have about $35k across a few 403(b)s. I'm happy with my 403(b) performance, so I likely won't roll over - she will roll over.
At first glance, it seems that the smart move is for her to open a Traditional IRA with somewhere like Vanguard so that we can write off the contributions. Then, I read that if your AGI is over $115k for the year, that you can't write off any of the 401k contributions. This seems like it would lead to paying taxes twice - once on the money going in, and then again when you begin to take a distribution. Is this true? What option does she have that's most advantageous from a tax perspective?
Also, I just pretend that I know what I'm talking about with this stuff, so if I've left out any important details, please feel free to ask!
$115,000 or more - no deduction
That to me says that you don't get to deduct your contributions from your taxes? Did I misunderstand it? How would that work, since she would be paying into it with taxed dollars since it wouldn't be withheld by the employer?