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I need help understanding IRA deduction rules for Tax year 2015. My wife and I both have 401K accounts from our work. Our filing status is married filing jointly. Our MAGI for 2015 is about 105K. I have already contributed $5500 on December 31, 2015 to a Roth IRA on my name.

Now, Can my wife open a traditional IRA on her name and contribute $5500 and deduct at least some part of it (as our MAGI is more than $98K we will not get a full deduction, I guess) reduce our 2015 Tax?

Can I withdraw from my Roth IRA (the money that I deposited on Dec 31, 2015) and deposit that to a traditional IRA on my name to get some more tax deduction for 2015 tax?

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    You don't need to withdraw money from your Roth IRA, but can instead ask the custodian to recharacterize the contribution (and any earnings on the contributions) as a contribution to your Traditional IRA. Do this by Tax Day for 2015, and the net effect is as if you had never contributed to a Roth IRA for 2015; that December 31, 2015 contribution is to your Traditional IRA.
    – Dilip Sarwate
    Feb 8, 2016 at 23:26
  • Did either of you contribute to your 401k during 2015?
    – user102008
    Feb 9, 2016 at 2:58
  • Yes. Both of us did contribute to 401k
    – user3469604
    Feb 16, 2016 at 15:24

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At exactly 105K you can take a deduction of 13/20*5500 = $3575 each and the rest ($1925) as a Roth deposit. No need to have non-deducted money, when you can just make use of both flavors of IRA.

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