Ways to divide IRA contributions (between spouses, and also traditional vs. Roth)

[okaneplease]

Our situation: Both over 50 and therefore eligible to contribute $7,000 each for 2020. One of us has earned income under $7,000, but the other has earned income over $15,000, so the combined total exceeds $14,000 (2 contributions @ $7,000).

Also, our MAGI is between $104,000 and $124,000, so we can't have full deductibility for the traditional IRA.

Right now, TurboTax allocates $1,050 per spouse as deductible and $5,950 as non-deductible for T-IRA.

Questions:

1. Can we allocate $1,050 each to the T-IRA and $5,950 each to our Roth IRAs?

2. If so, how do we do that? (Easily done with the software?)

3. Perhaps simpler, can one of us allocate $2,100 to our own T-IRA, putting the balance of $4,900 to our own Roth, while the other spouse allocates $7,000 to their Roth?

4. If so, how do we do that?

Thanks!

[DanaB27]

Yes, if you both had an retirement account at work then both of you will have a partial deduction if your MAGI is more than $104,000 but less than $124,000. Please see IRA deduction limits for details.

1) I can't see any details of your return but if the contribution of $1,050 to the traditional is the allowed deductible amount then, you can contribute this amount to the traditional IRA and $5,950 to a Roth IRA.

2) Please follow these steps to enter a traditional IRA and Roth IRA contribution:

1. Open your return
2. Click on "Search" on the top right and type “IRA contributions”
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA” and "Roth IRA" for both you and your spouse
5. Go through the interview paying special attention who's contribution the interview is asking about.

3) No, if you both have a retirement account at work then both of your contributions will be limited (see above).

[okaneplease]

@DanaB27, I actually just put in the numbers for the varying scenarios to see how TurboTax handled then.

For the first scenario, it allows me to put $1,050 each into both spouses' T-IRAs and the balances of $5,950 each into both spouses' Roth-IRAs, no problem.

But when I tried the second scenario, putting $2,100 into one person's T-IRA (then $4,900 into that same person's Roth-IRA) and putting $7,000 into the other person's Roth IRA, it looks like it limits T-IRA deductibility to $1,050.

So...the deductibility cannot be combined, but instead divided into each spouse's account. Interesting...but no big deal if that's the case.

(We each had access to a workplace retirement account until becoming unemployed in March and April, respectively, 2020.)

[DanaB27]

Yes, if you had an retirement account at work for one day then you are considered to have been covered by a retirement plan all year in regards to the IRA deduction limits. Therefore, it will be limited for each person if you both had an retirement account at the beginning of 2020.