Pension Income - Can I make a deductible IRA contribution?

[Guest JimJ]

If I receive income from a pension plan, am I able to make an IRA contribution & is it deductible?

My spouse currently is employed and is covered by a plan at work. Is she able to make a deductible contribution?

Thanks for your help!

JimJ

[Guest Fishchick]

If you are younger than 70.5, you may be eligible for a spousal contribution if your spouse earns enough to cover your contribution. If your only income is from your pension, not from employment, then you have no earned income and must rely on your spouse to provide the basis for your contribution.

As far as the spouses' contribution, as long as she is under 70.5, she can make a contribution. Whether it is deductible or not depends on your total AGI.

You also must be filing jointly for both of these situations to apply.

Review IRS Pub 590 for details.

[John G]

If you are not able to deduct the IRA (or even if you can), you may want to consider a contribution to a Roth because they have no required distributions and the Roth has some attractive inheritance options.

If your income tax bracket is low and you do not need distributions from an IRA now, you may want to consider a conversion from regular to Roth IRA. You would not be forced to take any distributions from the Roth and again might have some attractive inheritance options. Since this is a complex issue, you should ask an accountant or tax preparer for advice on the details.

[Appleby]

Note as well that that there income caps for individuals who wish to fund a Roth IRA.

These income caps do not apply to a traditional IRA, except for deduction purposes... another detail to which you may want to pay attention.