401K IRA Contributions

[Temeku999]

I am over 50 years old and my wife is over 60 years old. I went back to work and will contribute 30000 to my work 401K.  Can I still contribute 8000 to my none working wife's IRA? 

Reading on the web says you can, then I hit a line that says you cannot if you have a 401K.  I do not understand what that means or if I can contribute to my wife's IRA. I thank you for any help that is given.

[DoninGA]

Go to this IRS website for IRA contributions if you have a retirement plan at work for tax year 2024 - https://www.irs.gov/retirement-plans/plan-participant-employee/2024-ira-contribution-and-deduction-l...

Note that the website is only for deducting the IRA contribution on your tax return.  Even if your Modified AGI is greater than $143,000 you can still contribute the $8,000 to your spouse's IRA although it would not be deductible on your tax return.

[Temeku999]

I think I forgot to add my income to that question. I will make 65000. After I contribute 30000 to my  401K, I would like to add to my wife's IRA to lower our taxes and put us under the threshold of her SS being taxed.

Is this 8000 contribution to my none working wife's IRA deductible? Thank you

[DoninGA]

Since your Modified AGI will be $123,000 or less then the entire $8,000 contribution to her IRA would be deductible.

[dmertz]

The MAGI limit for being able to deduct your nonworking wife's entire $8,000 traditional IRA contribution is $230,000.  $143,000 would be the limit of your wife was covered by a workplace retirement plan for 2024.  (I'm assuming that there were no additions to a workplace retirement plan for your wife for a plan year ending in 2024 that might have happened if your wife is recently retired.)

For your wife to be eligible to make a spousal IRA contribution, you must file a joint tax return.

[fanfare]

You xhould be able to make  some deductible contribution to your own IRA also, or to a Roth IRA.

Your stated income is not above the phase-out endpoint.

@Temeku999 

[Temeku999]

I am maxing out my 401k at work with 30,000. Are you saying I can still put 8000 in my IRA too? I thought I was limited to 30,500 combined 401k and IRA contributions.

[fanfare]

The limits on those two plans are separate limits.

[Temeku999]

So I can put 30,500 in my 401k and 8000 in my IRA and another 8000 in my wifes IRA and it is all deductable? 

[DoninGA]

The contributions to a 401(k) are not deductible.  You can deduct the contributions to your IRA and your spouse's IRA on the federal tax return.

[Temeku999]

I thank you so much for your help. You say the 401k is not tax deductible.  Is that because your employer has already adjusted your reportable income? I mean if im making 60,000 and contribute 30,000 to the 401k. Then my taxable income would be 30,000. Then contribute 8,000 to my IRA and 8000 to my wifes IRA, I would then have a 14,000 taxable income. Is this correct and good with the IRS?

[fanfare]

If you have an employer retirement plan,

you can still contribute to your own IRA, and deduct it until you reach the phaseout range of AGI.

The tax software will calculate the deductible portion, which you should calculate before you take action.

[VolvoGirl]

@Temeku999  Yes, the 401K comes out of your pay pre-tax and has already been deducted from your wages.  Your W2 will only have 30,000 in box 1 for wages.  The 30,000  401K will be in box 12.