What are the rules if we are over the age of 70 1/2 and one of us (husband) is still working and contributing to a traditional IRA and contributing to another's (wife) Roth IRA?
Turbo Tax claims that we made an excess contribution for the amount contributed to the traditional IRA.
Once you reach age 70 1/2, you can no longer contribute to a Traditional IRA.
In general, if the excess contributions for a year aren’t withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax can’t be more than 6% of the combined value of all your IRAs as of the end of your tax year.
Once you reach age 70 1/2, you can no longer contribute to a Traditional IRA.
In general, if the excess contributions for a year aren’t withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax can’t be more than 6% of the combined value of all your IRAs as of the end of your tax year.
Also, make sure that amounts reported in box 12 of his W-2 (if any) are entered only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax. If your husband is self-employed and made contributions to a SEP plan or SIMPLE IRA established under his business, these are entered in the Business section, not under Deductions & Credits; SEP and SIMPLE IRA contributions are still permitted after age 70½.
Does this rule still apply if it is an employer plan? AND he is still working?
The still-working rule does *not* apply to IRAs, including SEP and SIMPLE IRAs. Even though contributions can be made to SEP and SIMPLE IRAs after 70½, the SEP and SIMPLE IRAs are subject to RMDs for the year the individual reaches age 70½ and thereafter, whether or not still working. The still-working exception to taking RMDs applies only to qualified retirement plans (401(k), 403(b), 457(b), 401(a), ESOP and federal TSP plan), and only if the individual is not a more than 5% owner of the company in the year the individual reaches age 70½.