IRA and Social Security question

[UncleHoney]

I'm still working this year and DW isn't, but she is collecting Social Security. Is there any reason that she couldn't buy an IRA if she is less than the 70 1/2 age limit? I haven't found anything that says she wouldn't be eligible.

Ron

 

[crazy connie]

She can contribute to a spousal IRA.

 

[retire@40]

If the tax benefit of the contributions outweighs the expected tax consequences of the distributions, then it's a go.

Your CPA should be able to tell you what kind of IRA and the maximum she and you could contribute, based on the information on your tax return for the year.

If you are not sure, you could always wait until after the end of the current year and make those 2006 contributions before April 15, 2007.

 

[UncleHoney]

With the SS distributions, the tax damages this year are going to be sizeable. But the plan is to offset the extra income by maxing out my 401K and adding the IRAs. Plus it will give me a chance to move some CDs from the taxable side to tax defered.

 

[New Thinking]

You need to look at which type of IRA you want to invest in..Roth or "regular"...Could be that Roth is much better and you wouldn't have to take RMDs in a couple of years. If you do take it later as Roth, it won't impact the taxation of your SS.