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kevtrace asked:

"I've just started to research IRAs and I have a couple of questions;

- are you limited to contributing to an IRA based on income (ie if income is greater than a certain level, you can't contribute to an IRA for the tax year)? If so, what is that income level?

- my spouse does not work, so I believe I can open a spouse IRA as well as an IRA for myself. Can the spousal IRA be a Roth IRA? How do I nominate an IRA to be a spousal IRA?

- i intend to open an IRA account this year (and a spousal IRA). Can I contribute the full $2000 to each and have the money considered under the 1999 tax year?"


I am going to answer your second and third questions first as they are easy and have short answers. Yes you can contribute to an IRA for yourself and for your non-working spouse provided you have at least $4000 in income for the year. The accounts can be either a ROTH or a Traditonal IRA (see below for more details). You do not need to do anything to designate an IRA as spousal, just open it in your spouses name. To contribute for 1999 the accounts must be open before the tax filing deadline April 17th this year (the 15th is a Saturday).

The first part of your question is a little less straight forward I don't want to confuse you but the answer to your questions is...depends. Depends on what you ask?

What type of IRA you will be opening a Traditional or Roth IRA.

First lets look at Traditional IRA's. There is no income limit if you are opening a Traditional IRA, you can contribute no matter how much you earn, as long as it is more than $4000. You may be limited in your ability to deduct a Traditional IRA from your taxes if you are covered by an employers retirement plan (401k, pension ect).

Second lets look at a Roth IRA. If you are married filling a joint tax return you can make a full contribution to a Roth if you make less than $150,000. The amount you can contribute is reduced by $1 for every $5 over $150k that you make, you could make a partial contribution if you make less than $160k.

I hope this answers your questions..

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