Can I contribute to a traditional IRA if I participate in my employers retirement plan? What about if my spouse participates in an employer sponsored plan?
In 1997, the ability to deduct any portion of a contribution to a traditional IRA was not allowed if either spouse participates in an employer sponsored plan. To further expand the number of people who are eligible to take tax deductions for their IRA contributions, starting in 1998, the law no longer considered both spouses to be members of a retirement plan if only one spouse is covered under that plan. Under the new law, a spouse who does not have earned income could make deductible contributions of up to $2,000 in 1998, even if the working spouse was covered by a retirement plan, as long as the couple’s income was $150,000 or less. (A partial deduction could be taken if income was between $150,000 and $160,000.
