dmertz
Level 15

Deductions & credits

hesformes is correct except that the amount deferred to the traditional account reduces the amount of net earnings available to contribute to a traditional or Roth IRA.  With only $4k deferred to the traditional account, enough ($16,000) remains of the net earnings to support maximal traditional or Roth IRA contributions for both spouses (until the individual annual limit goes above $8,000 in the future).