There are retirement saving strategies for married taxpayers that many miss.
Perhaps you think you are blocked from making a deductible IRA contribution because you are a participant in an employer plan, but what about your spouse? The IRS tax code allows for one spouse to make a tax deductible contribution for the other spouse when they file a joint tax return.
- Perhaps your spouse works, but is not covered by an employer plan.
- Perhaps your spouse does not work in this tax year.
In either case, the working spouse may make a deductible IRA contribution for the other and the income cap is higher than it is if both are covered by an employer plan. Income phase-out starts at an adjusted gross income of $183,000 and phases out entirely at $193,000 in 2015.
This permits some married couples to contribute the full $5,500 ($6,500 for age 50 and over) for the spouse without an employer plan and they receive a tax deduction.
IRA contributions can be made up until you file your tax return so you have three and a half months after the tax year closes to fund the prior year’s IRA and receive a tax deduction.
Be sure to consult your tax advisor to make certain this is an appropriate strategy for you. IRA contributions are not allowed in the year you turn 70 and a half and the years following.
Written by Connie C. Guelich, CFP, AEP, CLU, ChFC. This represents our views at the time of this writing, and it is subject to change. It is not intended to be personal investment advice. If you would like to discuss your own account, please don’t hesitate to call us. We are here to help and welcome your call.