When can you contribute to personal IRA?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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My wife and I file jointly, we are both over 50 years old.

I still work and have an employer 401K plan. My MAGI exceeds IRA contribution limit for deduction. I will do a 2018 contribution of $6,500 to personal IRA, knowing no deduction allowed since my MAGI is too high and I'm covered by an employer 401K plan.

My wife is retired. Her income is zero. She is not covered by an employer 401K plan. Now my questions:

1) Because her income is zero, is she eligible to contribute to her own personal IRA at all? The money used for a contribution would have to come from our jointly held accounts.

2) If #1 is ok and she is eligible to contribute, is her contribution deductible because her income is zero and she is not covered under an employer 401K plan, or is not deductible because my MAGI (or is it our MAGI since we file jointly) exceeds the limit?

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Best answer by RachelW33

1) Yes, your wife can make a Traditional IRA Contribution even though she is retired and did not have any "earned" income if she is under the age of 70 1/2 as of 12/31/18. This is known as the "spousal IRA".

2) If she is under the age of 70 1/2 and makes a contribution to her Traditional IRA, it will be deductible if your joint Modified Adjusted Gross Income (MAGI) does not exceed $199,000. If your MAGI is below $189,000 she can make a $5,500 deductible IRA Contribution ($6,500 if age 50 or older) and if it is between $189,000 and $199,000 she will be able to make a partial deductible contribution.

Please comment below if you need further clarification.