IRA accounts and maximum income

#4 10-19-2005, 04:42 AM

Many thanks to everybody for very helpful replies.

Alex

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#3 10-16-2005, 05:49 AM

agordon10[at]yahoo.com wrote:

- quote -

> I was thinking of opening an IRA account; however after
> reading IRS pub. 590 I got an impression that I cannot do
> that if the combined income on my joint tax return exceeds,
> say, 200k, and that my only way to contributed to a
> retirement would be a 401k plan. Is that correct?

Anyone with earned income can contribute to an IRA. The
only limitation is on whether the contributions may be
*deducted*. If you're covered by a qualified retirement
plan, deductibility is phased out at various income levels
depending on your filing status (which should be in the
publication).

Regardless of whether you can deduct the contributions, they
still grow tax-deferred.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#2 10-16-2005, 05:30 AM

agordon10[at]yahoo.com wrote:

- quote -

> I was thinking of opening an IRA account; however after
> reading IRS pub. 590 I got an impression that I cannot do
> that if the combined income on my joint tax return exceeds,
> say, 200k, and that my only way to contributed to a
> retirement would be a 401k plan. Is that correct?

Anyone with taxable earned income can contribute to an IRA.
You are confusing contributing to an IRA with deducting your
contribution. If neither of you are active participants in
a retirement plan at work or a self-employed plan, then each
of you may deduct your individual contributions. If one of
you is covered by a plan at work, then that individual must
have a joint modified AGI below $75,000 (2004) to allow a
deduction. The other individual not covered by a plan, must
have a joint modified AGI below $160,000 to deduct a
contribution. The amount of the deduction phases out if the
modified AGI isn't at least $10,000 less than the above
limits.

You state that your combined income exceeds $200K. Assuming
that your modified AGI is also above the $160K limit, then
neither of you could deduct your annual IRA contributions.
Assuming neither of you are self-employed, then the only
retirement plan available that may offer immediate tax
savings is an employer plan that allows pre-tax
contributions (e.g., a 401K plan).

If your joint modified AGI is less than $160,000 then you
could make contributions to a Roth IRA.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#1 10-16-2005, 05:11 AM

- quote -

> I was thinking of opening an IRA account; however after
> reading IRS pub. 590 I got an impression that I cannot do
> that if the combined income on my joint tax return exceeds,
> say, 200k, and that my only way to contributed to a
> retirement would be a 401k plan. Is that correct?

Not correct. You can open a traditional IRA regardless of
your income if you are under 70-1/2 years old. You may not
be able to deduct your contribution however at those income
levels if you are also covered by a retirement plan at work.

You cannot open a Roth IRA with joint income above $160K.

--
Don EA in Upstate NY

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

10-16-2005, 05:11 AM

<agordon10[at]yahoo.com> wrote:

- quote -

> I was thinking of opening an IRA account; however after
> reading IRS pub. 590 I got an impression that I cannot do
> that if the combined income on my joint tax return exceeds,
> say, 200k, and that my only way to contributed to a
> retirement would be a 401k plan. Is that correct?

No. Anyone under age 70 1/2 with earned income can
contribute to a traditional IRA. At your income level you
can't deduct the contribution if you or your spouse are
covered by a retirement plan at work, but you can make
nondeductible contributions, which are discussed in Pub 590.
See also Form 8606, Part I.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#-1 10-13-2005, 03:59 AM

I was thinking of opening an IRA account; however after
reading IRS pub. 590 I got an impression that I cannot do
that if the combined income on my joint tax return exceeds,
say, 200k, and that my only way to contributed to a
retirement would be a 401k plan. Is that correct?

Many thanks,
Alex.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

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