by Kristin P. Sinclair – A Accu Tax – November 7, 2018
You have decided to pursue a Traditional IRA. That is an Excellent Decision ! So what is your next step ? First check to make certain that you are eligible to open a Traditional IRA for 2018 and/or 2019. Normally you should qualify to open and make contributions to a Traditional IRA if:
- You (or your spouse if you file jointly) received taxable compensation during that tax year (2018 or 2019).
- You were not age 70 ½ by the end of that tax year (2018 or 2019).
Whether or not you are covered by another retirement plan you can start your Traditional IRA. If either you or your spouse is covered by an employer retirement plan; however, then it is important to note that your deductible contributions may be limited.
So what if you and your spouse both have compensation ? If you both receive compensation and are under age 70 ½, then it is possible that each of you can open a Traditional IRA. However, you cannot both participate in the same IRA. Each should open his or her own Traditional IRA. If you file a joint return, then only one of you needs to have compensation, and both of you can open your own IRAs !
At age 40 and settled in Charlotte NC, Olivia and Stephen decide to open a Traditional IRA. They file jointly. Only Olivia receives compensation form her Charleston SC based employer, and she is covered by that employer’s retirement plan. She and Stephen become concerned that they will not be eligible. Although Stephen and Olivia learn from their tax advisor that they cannot both participate in the same Traditional IRA, they each still qualify for a Traditional IRA because Olivia earned compensation. Next they will discuss if there are limits on their 2018 or 2019 deductible contributions.
Updated by Kristin P. Sinclair: A Accu Tax
in Charlotte NC and Rock Hill SC
November 7, 2018 (803)329-0609
KPS: More information is available at IRS.gov.
See Publication 590-A and Publication 590-B.