IRAs for a non working Spouse.............

[Cut-Throat]

Can anyone tell me the details for IRAs for a Non Working Spouse? - That would be me (the lazy slug).

What are the contribution limits for each person for tax year 2005? Can you only contribute to a Roth? What are the income limits? And I assume that they have to made before 4/15/06.

 

[Lusitan]

I believe the limits for a non-working spouse are the same as for a working spouse. I'm too lazy at the moment to research it, but during years that my wife wasn't working we contributed the same amount into each of our IRA accounts; didn't matter whether it was Roth or traditional either.

 

[Evelyne]

Contribution Limits
 
2005-2007     $4,000
2008             $5,000

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Catch-Up Contributions
(if you are 50 or older as of the end of the year)
 
2005                           $500
2006 and thereafter      $1,000

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For ROTH IRA, any age with compensation (subject to income limits); also non-working spouses.

  Single filers income up to $95,000 (for full contribution)
  Joint filers income up to $150,000 (for full contribution)

For Traditional IRA, no income limits.

 

[Martha]

Cut, I agree with Theresa. However, only if your spouse isn't covered by a retirement plan where she works will you be able to deduct the full amount of your spousal traditional IRA from your income tax return. If I recall, your wife is covered by a retirement plan, therefor your spousal IRA is fully deductible only if your AGI is less than $150,000 and partially deductible if between $150,000 and $160,000.

 

[retire@40]

If I recall, your wife is covered by a retirement plan, therefor your spousal IRA is fully deductible only if your AGI is less than $150,000 and partially deductible if between $150,000 and $160,000.

I thought AGI limits were $70K joint, $50K single.

Partial deduction through $80K joint, $60K single.

 

[Cut-Throat]

Cut, I agree with Theresa. However, only if your spouse isn't covered by a retirement plan where she works will you be able to deduct the full amount of your spousal traditional IRA from your income tax return. If I recall, your wife is covered by a retirement plan, therefor your spousal IRA is fully deductible only if your AGI is less than $150,000 and partially deductible if between $150,000 and $160,000.

A bit confused. I thought the Lazy spouse could only contribute to a Roth and the Roth was not deductable whether you worked or not.

 

[Martha]

I thought AGI limits were $70K joint, $50K single.

Partial deduction through $80K joint, $60K single.

If you are covered by a retirement plan at work, you can take an IRA deduction if your modified adjusted gross income is less than $85,000 (married filing jointly) or $60,000 (single or head of household). (These are the 2006 numbers.) But CT isn't working. The rules are more generous for a IRA for the nonworking spouse.

 

[Martha]

Sorry for confusion CT.

If your Joint AGI is less than 150,000, you could contribute after tax money to a ROTH. Both you and your wife could do this.

If your Joint AGI is less than 150,000, you have the option of setting up a traditional deductible IRA for yourself.

You can put some in a Roth and some in the traditional IRA if you want, just so you keep your total at no more than $4500 for the year.

EDIT: the IRS publication is here: http://www.irs.gov/publications/p590/

 

[Cut-Throat]

OK, Thanks - I get my taxes done but I wanted to do some planning.