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My wife has a 401K through her job, to which we contribute significantly (close to max). I do not have a 401K, but I do have an IRA. I am 44 and she's 46; married filing jointly.

I've been reading through posts here and want to make sure I'm clear: we are allowed to open an IRA for her as well, provided we do not somehow together exceed our earned income (that would be pretty sad if we only had $8000 in earned income anyway). Right?


I was always under the impression that her 401K prohibited her from making a deductible contribution to an IRA as well, but I'm beginning to think I was wrong.

Don't be too hard on yourself. You may not have been wrong.

While anyone under age 70 1/2 with either taxable compensation or a jointly-filing spouse with taxable compensation can make an IRA contribution of some sort, if either spouse is covered by a retirement plan at work, deductibility of traditional IRA contributions is subject to the AGI-based phaseouts explained in Chapter 1 of IRS Publication 590. If only one spouse is covered the phaseout ranges are different for each spouse.

It could well be that your traditional IRA contribution is deductible but your wife's is not. In that case, she could make nondeductible traditional IRA contributions, but she's probably eligible to contribute to a Roth IRA (Chapter 2 of Pub 590). A Roth contribution is always better than a nondeductible traditional contribution. It's one of the few no brainers in our simplified tax law.

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