The amount that you can contribute to a Traditional IRA is not affected by the amount that you or your spouse contribute to a 401(k). However the amount of your contributions that you can deduct on your tax return can be affected.
According to page 9 of Pub 590A, "for 2016, the most that can be contributed to your Traditional IRA generally is the smaller of the following amounts: $5500($6500 if you are age 50 or older) OR your taxable compensation for the year." Please refer to page 9 of Pub 590A under the heading, "Kay Bailey Hutchison Spousal IRA Limit" for additional clarification. You can contribute to a Traditional IRA regardless of your income.
However, there are certain circumstances in
which you may not be eligible to take a deduction for your contributions or
that deduction may be reduced. In the event that you are NOT going to take a deduction, you still
want to report them in Turbo Tax so that you dont get taxed when these
contributions get distributed. To learn more about nondeductible contributions, please
refer to page 15 of Pub 590A under the heading, "nondeductible
contributions". https://www.irs.gov/pub/irs-pdf/p590a.pdf
Whether or not you can take a
deduction for your Traditional IRA contributions, depends on whether or not you
or your spouse (if married filing jointly) are covered by an employer sponsored
retirement plan. If one or both of you are covered by an employer sponsored
retirement plan, then your deduction might be reduced or eliminated based on
your modified adjusted gross income and your filing status.
To determine your modified
adjusted gross income, please see Worksheet 1-1 on page 15 of Pub
590A. https://www.irs.gov/pub/irs-pdf/p590a.pdf
Please refer to Table 1-2 and
Table 1-3 on page 13 of Pub 590A to see if your deduction will be limited. If you are
collecting social security, do not refer to these tables. Instead, see page 12
of Pub 590A under "social security recipients" for more information.
If your deduction will be
limited, then you can use Worksheet 1-2 "figuring your reduced IRA
deduction" on page 17 of Pub 590A, to determine the amount of your
deduction.
