topic Traditional IRA Contribution Eligibility in Retirement tax questions

Traditional IRA Contribution Eligibility

CJB-1959 — Thu, 27 Feb 2025 23:57:11 GMT

My wife retired in June so she is no longer covered by a retirement plan. Can she make a deductible 2024 Tax Contribution since she is now retired and no longer covered by a Retirement Plan?

Re: Traditional IRA Contribution Eligibility

CJB-1959 — Thu, 27 Feb 2025 23:59:26 GMT

I meant to say is she eligible to make a deductible IRA contribution since she retired in June 2024.

Re: Traditional IRA Contribution Eligibility

SusanY1 — Fri, 28 Feb 2025 00:17:10 GMT

Maybe. It will depend on the amount of income that she earned through the year. For purposes of determining if an IRA contribution is deductible, "covered by a retirement plan" means covered during any part of the year, if contributions were allocated to the plan.

So, she will likely have to meet the income rules for someone who is covered by a retirement plan, even though she is not presently covered (assuming she had a plan in the initial part of the year when she was working.)

The phase out income amounts can be found for both covered and non-covered taxpayers HERE.

Re: Traditional IRA Contribution Eligibility

CJB-1959 — Fri, 28 Feb 2025 16:35:26 GMT

Thank you. My wife has the following so it looks like a Traditional IRA Contribution is out for 2024 but a Roth IRA Contribution should be OK as she has earned income that exceeds the maximum Roth contribution of $8000.

Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the plan year ending with or within the tax year.

Re: Traditional IRA Contribution Eligibility

MinhT1 — Wed, 05 Mar 2025 18:42:59 GMT

It depends also on your joint MAGI (Modified Adjusted Gross Income).

She can contribute to the maximum ($8,000 if she is aged 50 or over) if your joint MAGI is less than $230,000 and to a reduced amount if MAGI is between $230,000 and $240,000, No Roth contribution is allowed for MAGI above $240,000.

Please read this IRS document for more information.