Can a spouse have a Traditional IRA deduction of 6500 (over 50) if she earned 6300 on job with retirement plan? Combined AGI is 128,000. IRA WS shows 0 ded for spouse?

[nlisenby]

Spouse only worked part of year, but did have retirement plan checked on her W-2.  Is she being limited because of her earnings or the combined AGI?  

[MichaelL1 · Accepted solution]

The income limit ($128K) is too high for here to do a deducible IRA.

For married filers, if you are covered by a company retirement plan in 2018 the deduction is phased out between $101,000 and $121,000 of MAGI.

[dmertz]

Also, she is only permitted a $6,300 traditional IRA contribution unless her spouse has earnings of *more* than $6,300 which can then be used to make a spousal contribution of the remaining $200.

[nlisenby]

She is being knocked out of a deduction because for the 6 weeks she worked, had Retirement Plan checked on the w-2....and her MAGI was too high.  IRS publication says Roth and Traditional contribution limits are the same.  Therefore she cannot even contribute to a Roth. 2019 she will not be working, therefore she could take a spousal contribution for that year.   Any comments on this?

[dmertz]

A contribution to a traditional IRA is still permitted, it just won't be deductible.  Basis in nondeductible traditional IRA contributions will reduce the taxable amount of a subsequent Roth conversion or traditional IRA distribution based on the proportion of basis to balance.