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<<I do have a couple of other miscellaneous questions I would like to know the answers to. If a married couple is filing their income taxes as married filing separately, can they open a Roth IRA and/or a traditional IRA and if so what are their income limits? Secondly, if a person takes a loan out against their 401K, can they deduct the interest from their income taxes? >>

A married couple filing separately will have a very difficult time opening a Roth IRA. That's because on those returns the AGI phase out range is $0 to $10K for both parties. For sure one will be left out in the cold, and the other will only be able to make a partial contribution. If both have an AGI over $10K, then neither may contribute to a Roth. Both, though, may contribute to a traditional IRA. That can be 100% of earnings up to a maximum of $2K per year. Deductiblity will depend on AGI and coverage under a retirement plan through work. See IRS Publication 590, Individual Retirement Arrangements, for details.

Interest on a 401k loan is not deductible. Further, it is ultimately taxable to you. That's because when you borrow from your 401k you pay back the principal and interest with after-tax dollars. The interest is credited to your account. When you retire, that interest is considered earnings on the account, and it will be taxed at ordinary rates when you take the 401k money.

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