Husband's IRA not tax deductable??

[Anonymous]

How can this be? His work does NOT offer any retirement plan. I have a 401k at my work that I contribute. I put 5,000 in an IRA for him for 2012, thinking it will bring our tax bill down. Willl, I guess I was wrong. Turbotax says because we make more than 183k and I contribute to a 401k, that his IRA contribution is NOT tax deductable. This really stinks and I am mad! It just doesn't seem fair that we get screwed because his company doesn't offer a 401k. We can't comfortably retire on 1 spouse's retirement plan.

[Anonymous]

Anonymous wrote:How can this be? His work does NOT offer any retirement plan. I have a 401k at my work that I contribute. I put 5,000 in an IRA for him for 2012, thinking it will bring our tax bill down. Willl, I guess I was wrong. Turbotax says because we make more than 183k and I contribute to a 401k, that his IRA contribution is NOT tax deductable. This really stinks and I am mad! It just doesn't seem fair that we get screwed because his company doesn't offer a 401k. We can't comfortably retire on 1 spouse's retirement plan.

IRAs have income limits, so yes, if you are above that limit then it is not a deduction.

[Anonymous]

http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2012-IRA-Contribution-and-Deduction-Limits---Effect-of-Modified-AGI-on-Deductible-Contributions-if-You-are-NOT-Covered-by-a-Retirement-Plan-at-Work

You are above the limit. There is no rule that says you can't save to an IRA, but you can't take the deduction for it.

[Anonymous]

Wah.

He chose where to work, right? And you make more than $183k -- you don't get to complain about the fairness/unfairness of the tax law. Ugh.

[Anonymous]

OP, the solution is simple: contribute more to your 401k - the amount you'd normally set aside for an IRA for DH. Or continue to pay taxes.

[Anonymous]

He's still saving for retirement, he just doesn't get the tax deduction now.

I do, because we made $110,000 less than you this year.

[Anonymous]

OP, it sucks but it's true. We're in the same boat.

[Anonymous]

He should be contributing to a Roth IRA anyway, but based on your income, he still might not be eligible to contribute the full $5,0000.

[Anonymous]

They can likely contribute to a traditional IRA and then recharacterize to a Roth.

OP needs to make sure she is maxing our her 401(k) contribution and not stopping at whatever her employer match is. I think the 2013 limit is $17,500 pre-tax for the 401(k).

[Anonymous]

OP keep in mind that he still gets the growth in the Ira on a tax deferred basis. Over time that's worth something. I still contribute the max to my non deductible IRA.