I am looking at the link here to be able to figure out if i qualify for tax deduction in traditional IRA.
on Am I eligible tab and I have couple of questions
- it says "During the 2015 tax year, one spouse is covered by an employer sponsored plan and one isn't". What does covered mean? If I am contributing for 401k then I am covered and if I am not contributing then I am not covered?
- If so, it almost sounds like contributing small amounts to 401k is really bad deal because it Not only reduces my IRA eligibility by almost 70k but I am also not reaping benefits of full tax deduction by fully contributing into 401k. Is my conclusion correct?
- It also means that if(hypothetically) my combined income is more than 230k, and even though both husband and wife are fully contributing to 401k (18k each), still there is no way to qualify for IRA tax deduction because according to the link above the combined income(after 401k contribution) has to be 183k. Is that correct?