I am using the IRA Calculator from one of the main tax software. Link here

After I put the information of my spouse and I, it comes out saying that there is no marginal tax saving for neither of us. I need to understand what is excluding us from getting the benefit of opening an IRA account.

We are both eligible in using the 401K in our jobs, but she is not using it at all, and I have not max mine this year.

Any ideas of what could be discarding us?

Additions: I am married filling jointly.

Guys thanks for your help. What is the difference between these two statements:

  • A married person who actively participates in an employer-sponsored retirement plan but whose spouse does not, provided the couple files jointly and has AGI below $109,000 for 2010, subject to phase-out rules starting at $89,000.

  • A married person who does not actively participate in an employer-sponsored retirement plan but whose spouse actively participates in such a plan, provided the couple files jointly and has joint AGI below $177,000 (subject to phase-out rules starting at $167,000).

These were provided by Vitalik, on the link.

3 Answers 3


You didn't mention if you were married or not. If you are, the deductibility of IRA contributions starts phasing out at $89,000 AGI and is no longer an option at all at $109,000 AGI. The limits are lower for singles.

If you want to contribute to retirement and deduct the contributions, start maxing your 401k contributions for the year. You should be saving at least 10% of your income for retirement as a bare minimum to live as well as you do today.

  • Thanks for the AGI information. I will try to increase our contributions, but I think is too late in the year to do that. Thanks for the tip.
    – Geo
    Nov 17, 2010 at 12:37

The cutoff for Roth is higher, $166K for MFJ. If you are under this number, why not take advantage and start a Roth IRA?

BTW - My employer 401(k) takes 2 weeks to change % contribution, so even today I can impact the 2 December checks. The maximum withholding is 75% for our plan, so even now, I could catch up a bit.

  • Joe, I never understood RothIRAs. They don't give any tax advantage now, and they tie your cash for 30 years :(. At least the traditional give me some kind of relieve. Maybe I need to understand them better to put my money there.
    – Geo
    Nov 18, 2010 at 14:48
  • 1
    The Roth is the flip side of the Traditional IRA. Traditional - Money goes in pre-tax, but is taxed on withdrawal. Roth - Goes in post tax, but comes out, with earnings tax-free. This choice lets you negotiate your potential changing rates, the choice takes some thought to maximize your tax savings over time. Nov 18, 2010 at 16:45
  • Also, as of 2010 there is no longer an income limit on Roth IRAs. (Technically there still is, but you can open a traditional IRA and immediately convert it, regardless of your income.) Nov 27, 2010 at 3:18
  • 1
    Phil, careful,sir. There is no limit on income to convert, true, but. If you have no pretax IRA money you are home free, deposit, pause a few milliseconds, and convert. If you have any existing pretax money, it gets included in the tax calculation for converting. e.g. You deposit $5000, but have $15K in existing account. Any conversion will have 75% of its amount taxed. Nov 27, 2010 at 17:11

Apparently the rules are very complex and based on your income, age and 401k eligibility. Check out this article "An IRA Primer"

  • Thanks Vitalik for the answer. I have added a note on my questions since it was too large to fit it in a comment box.
    – Geo
    Nov 18, 2010 at 2:34

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