@april15comingsoo wrote:
I am married filing jointly. Our AGI is under $218k. My spouse has a 401(k) retirement plan at work to which he contributed about 6k this year. I worked about 8 months with a company and contributed about 2k to that retirement plan, which I then rolled over to my personal IRA. Can he or I contribute anything into a personal IRA and deduct it?
There are two things happening.
It sounds to me that in Turbotax, you might have entered the rollovers in the contribution section? A rollover is not a contribution, and rollovers are only entered from the 1099-R. If you entered the rollovers as if they were contributions, you could get a warning about exceeding the contribution limit.
Then, legally speaking, because a rollover is not a contribution, it does not affect your ability to make a contribution. So your contributions are controlled by the normal rules, ignoring the rollovers.
You can always contribute up to $6500 (or $7500 if over age 50) to a traditional IRA, and your spouse can contribute the same. However, you can't deduct the contribution if you are over the income limits shown here.
https://www.irs.gov/retirement-plans/ira-deduction-limits
You may also be able to contribute to a Roth IRA, depending on your income and filing status.
If you make a non-deductible contribution to a traditional IRA, you must keep track of the non-deductible basis on form 8606 (Turbotax will do this for you), so that when you make withdrawals in retirement, the portion of the account that came from non-deductible contributions will be tax exempt since it was already taxed. We can also discuss the concept of a "backdoor Roth" depending on your circumstances.
