Question

e t view story Bookmarks Window -OLAR Martin Ary Room Cullabert EROOT IRA CONTRIBUTION EXAMPLE (2 of 2). Example Liza and Mikal (both 41) filed married filing jointly. Liza is covered by a 401(k) plan at work and earns $96,000. Mikal is not covered by a plan at work and earns $30,000. How much can each of them contribute to a traditional IRA?

Answer 1

Answer:

Their combined AGI = $126,000. Their AGI exceeds the top end of the phase-out range for MFJ for ‘active participant spouse’

Since Liza is the active plan participant and their joint income exceeds the upper phase-out limit, she may not make a deductible contribution to a traditional IRA. She could, however, make a $5,000 contribution to a Roth IRA, since their AGI is not in the Roth phase-out range.

Mikal can make the full $5,000 traditional IRA contribution since the AGI phase-out for the spouse that is not in an active plan does not kick in until $167,000.