ira situation

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i turned 70and a half this past year so my question is if i am still working and my spouse is in retirement and receives a pension can we claim a deduction for an IRA, if so how much?

dmertzAnswer

Level 15

The RMD age change under the SECURE Act only applies to those reaching age 70½ after 2019.

Yes, your wife can contribute to an IRA based on your compensation as long and you file a joint tax return. If the contribution is for 2019 she must also be under age 70½; for contributions for 2020 and beyond there is no age limit. Whether or not a contribution to a traditional IRA will be deductible will depend on your modified AGI for the purpose and whether or not you yourself are covered by a workplace retirement plan.

macuser_22

Alumni - Champ

@jm789op wrote:

i turned 70and a half this past year so my question is if i am still working and my spouse is in retirement and receives a pension can we claim a deduction for an IRA, if so how much?

You should be aware that the SECURE Act signing into law in December that went into effect on Jan 1 2020 raised the age to take the first RMD from 70 1/2 to 72 AND removed the upper age limit to contribute to an IRA as long as you have sufficient taxable compensation to contribute.

The legislation itself covered many unrelated things and is lengthy to read, but Fidelity gave a simplified breakdown

https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement

The maximum IRA contributions for 2019 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355

See this IRS link for Traditional IRA deduction limits when covered by a retirement plan at work.

https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

dmertzAnswer

Level 15

The RMD age change under the SECURE Act only applies to those reaching age 70½ after 2019.

macuser_22

Alumni - Champ

I know. When I read it (70and a half) I only saw the 70 (I guess I am used to seeing it 70 1/2).

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

jm789opAuthor

Level 2

So in summary: if I'm working and I'm covered by a retirement plan and i turned 701/2 in 2019 and my spouse who is retread and receives no compensation except for their social security and pension, then they cannot take the IRA deduction.

DoninGA

Level 15

@jm789op wrote:

So in summary: if I'm working and I'm covered by a retirement plan and i turned 701/2 in 2019 and my spouse who is retread and receives no compensation except for their social security and pension, then they cannot take the IRA deduction.

[Edited]

IRS Publication 590-A - https://www.irs.gov/pub/irs-pdf/p590a.pdf

Your spouse -

For 2019, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts.
1. $6,000 ($7,000 if you are age 50 or older).
2. The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts.
a. Your spouse's IRA contribution for the year to a traditional IRA.
b. Any contributions for the year to a Roth IRA on behalf of your spouse.

macuser_22

Alumni - Champ

@DoninGA The $103,000 is if *you* are covered by a retirement plan, the limit for a spouse that is not covered is $193.000.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**