Yes, she can fund up to $7,000 subject to limitations. Everyone is eligible to make contributions to a traditional IRA, but a tax deduction for those contributions may not always be available. You may need to reduce or entirely eliminate your IRA deduction if you or your spouse
- contributes to an employer-sponsored retirement plan, such as a 401(k) or 403(b), and
- your Modified Adjusted Gross Income (MAGI) exceeds annual limits.
- you must have earned income or you can contribute to your traditional IRA past age 70½ as long as one spouse has eligible compensation, that spouse can make IRA contributions for an IRA for the nonworking spouse.
For a Traditional IRA, for 2020 full deductibility of a contribution is available to active participants whose 2020 Modified Adjusted Gross Income (MAGI) is $104,000 or less (joint) and $65,000 or less (single); partial deductibility for MAGI up to $124,000 (joint) and $75,000 (single). Social Security benefits received by a tax filer and his or her spouse filing jointly are counted when determining a household's MAGI. For people who have other income, some Social Security benefits may be included in their AGI.
Under the SECURE Act, you can contribute to a traditional IRA after age 70½. Required Minimum Distributions still apply to traditional IRAs at 70½ or 72 depending on your birthday. If you have earned income in retirement, Roth IRAs can be a great way to save
Yes, she will be subject to RMD's for the new IRA. your required minimum distribution is the minimum amount you must withdraw from your account each year. You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 72 (70 ½ if you reach 70 ½ before January 1, 2020).
I understand this is a lot to deal with. TurboTax will guide you through all of these conditions and offer a suggestion regarding the allowed contribution towards the end of you interview.
-follow these links for more information-
Retirement Plans FAQs regarding Required Minimum ...
IRS: Retirement Topics – IRA Contribution Limits - Internal ...
[edited 3/12/2021\12:24pst]
