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Say there's a Couple - John & Mindy.

John earns $140,000 per year an Mindy earns $128,000 per year John does NOT have an Employer sponsored 401(k) while Mindy's Employer provides a 401(k) plan and she actively participates in it.

Say they file their taxes together for 2017.

Are either of them eligible to open a Roth or a Traditional IRA?

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"Open" is meaningless. It's whether they can "contribute" (and how much) that matters.

Filing as Married Filing Jointly at their AGI of about $268,000, higher than $196,000, neither of them can contribute directly to Roth IRA.

Anyone with no matter how high an income can contribute to a Traditional IRA, so both of them can contribute $5500 to Traditional IRA.

However, their ability to deduct a Traditional IRA contribution depends on certain conditions. For Mindy, she is covered by a retirement plan at work, so she cannot deduct any Traditional IRA contribution if their AGI is higher than $119,000 (which it is). For John, he is not covered by a retirement plan at work, but his spouse is, so he cannot deduct any Traditional IRA contribution if their AGI is higher than $196,000 (which it is). So neither of them can deduct a Traditional IRA contribution, so the only contribution they can make is a "non-deductible" Traditional IRA contribution.

One thing they may be able to do is a "backdoor Roth IRA contribution". If neither of them has any existing pre-tax money in Traditional IRAs or other pre-tax IRAs, then they can make non-deductible Traditional IRA contributions, and then immediately convert all of it to a Roth IRA. Neither of those steps have income limits, and neither of those steps (assuming the condition about not having existing money in pre-tax IRAs is true) incur taxes, so the result is the same as a regular Roth IRA contribution.

  • The contribution limit is increased to 6500 for persons age 50 or older (as of the end of the year). Also in the future these limits will be adjusted for inflation (if and when the Fed manages to get nonnegligible inflation to occur). – dave_thompson_085 Jun 26 '17 at 1:16

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