Q: If I contribute to my 401(k), can my spouse and I still contribute to an IRA?

A: Yes. The real question, however, is, What type of IRA contribution is possible?

In Year 2019, the IRA contribution per person is limited to the LESSER of your earned income or $6,000.  And if you will be age 50 or over by December 31, you can contribute an additional $1000 (commonly referred to as a “catch-up” contribution) for a total of $7,000.

First, your spouse can make a deductible IRA contribution–even without earned income assuming you two are filing a joint return—providing your tax return’s “modified adjusted gross income” (MAGI) is:

  • Below $103,000, both your spouse and you can make deductible IRA contribution.
  • More than 103,000 but less than $123,000, a partial deduction is permitted.
  • More than $123, no deduction.

Second, if you cannot make a deductible contribution, some or all of the contribution would preferably be designated as a Roth IRA Contribution based on your MAGI.  If MAGI is:

  • Below $193,000, both your spouse and you can make Roth IRA contributions.
  • More than 193,000 but less than $203,000, a partial ROTH contribution is permitted.
  • More than $203, no ROTH contribution is permitted.

As a general rule, Roth contributions are always better than non-deductible contributions. A separate IRA account is required for Roth contributions.

FYI:  There are no MAGI restrictions for making Roth 401(k) contributions.

The MAGI limits above can be different for taxpayers with another filing status.