Who Can Open a Traditional IRA ?

Who Can Open a Traditional IRA ?

by Kristin P. Sinclair  –  A Accu Tax  –  January 11, 2020

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 2019 and/or 2020.  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 (2019 or 2020).​​
  • Starting in tax year 2020, even if you are over 70 ½ years of age, you still may be eligible to make a deductible Traditional IRA contribution.

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 from 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 2019 or 2020 deductible contributions.  


Updated by Kristin P. Sinclair:  A Accu Tax

in Charlotte NC and Rock Hill SC

January 11, 2020   (803)329-0615

KPS: More information is available at IRS.gov.

See Publication 590-A and Publication 590-B.  

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