From Melinda May, CPA | Featherstone
A Fredericksburg Today Partner
Three for the money
Many workers can choose among three types of IRAs.
Deductible IRAs. Whereas most workers and their spouses can contribute to regular (traditional) IRAs, only some people can deduct their contributions. A full deduction is available if you do not participate in an employer’s retirement plan; if you do participate, the deduction allowed depends on your income.
Example 1: Paula Adams, a single taxpayer who participates in a 401(k), must have had modified adjusted gross income (MAGI) of $63,000 or less in 2018 for a full deduction on her 2018 tax return. If her MAGI is greater than $63,000 but less than $73,000, a partial deduction is allowed.
Different MAGI numbers apply to married taxpayers filing joint returns, qualifying widows or widowers, and married taxpayers filing separate returns.
Contributions to traditional IRAs are not allowed after you reach age 70½.
Later this week, Roth IRAs, Nondeductible traditional IRAs and tax traps to avoid.