Many more wage-earning and non-wage-earning spouses are eligible to make tax-deductible Individual Retirement Account (IRA) contributions than ever before.
Prior law did not allow deductible contributions for spouses if one spouse was an active participant in an employer-sponsored retirement plan and the couple’s joint income exceeded $50,000.
Current IRA deductibility rules are outlined as follows:
- If neither spouse is an active participant in an employer-sponsored retirement plan, the entire IRA contribution is fully deductible, regardless of income.
- If both spouses are active participants in an employer plan, and their joint modified adjusted income (AGI) does not exceed the 2001 threshold of $53,000 to $63,000, their contributions will be fully or partially deductible.
- If one spouse is an active participant in an employer plan and the other spouse is a non-wage-earning spouse, the non-wage-earning spouse’s contribution is fully or partially deductible, provided the couple’s AGI does not exceed $150,000 to $160,000.
- If both spouses are employed and only one is an active participant in an employer-sponsored plan, the wage-earning spouse who is not covered by an employer plan may make a fully or partially deductible contribution, provided that the couple’s AGI does not exceed $150,000 to $160,000.
Before making any retirement funding decisions, consult your tax advisor regarding your personal tax situation.
Importance of Net Worth
To manage your money successfully, you need a standard by which you can measure your economic progress.
One gauge of your financial headway is your personal balance sheet; it will allow you to see your assets and liabilities, and where your money is going. You can then take steps to make your net worth grow by finding ways to control spending, reduce debt, and increase savings and investments.
Once you have an initial estimate, you can go into a more in-depth analysis, if you wish. For more information, call 589-3155. IBI