Author Topic: 401k/IRA question  (Read 1868 times)

cheapdad

  • 5 O'Clock Shadow
  • *
  • Posts: 22
401k/IRA question
« on: September 19, 2014, 11:04:24 PM »
I have tried to find this on google and I just can't get anything that answers my specific question.  Hopefully someone here can help me.

If I have a 401k and make under 96k per year (which I do) then I am allowed to open an IRA and put up to 5,500 into it per year tax free.  That, I get.

My question is, if my wife doesn't work, can I have a 401k and an IRA and open up an IRA for my wife also. That would give my family a total of two IRAs plus a 401k for a tax deferred total of $28,500 plus my company match.

Is this legal?  A link to a law would be helpful.  I can't find anything anywhere about having two IRAs and a 401k.  Maybe google doesn't think anyone would save that much.

bdoubleu

  • 5 O'Clock Shadow
  • *
  • Posts: 51
  • Age: 32
Re: 401k/IRA question
« Reply #1 on: September 19, 2014, 11:38:54 PM »
Quote
Who Can Open a Traditional IRA?

You can open and make contributions to a traditional IRA if:

You (or, if you file a joint return, your spouse) received taxable compensation during the year, and

You were not age 70 by the end of the year.

You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. See How Much Can You Deduct , later.

Both spouses have compensation.   If both you and your spouse have compensation and are under age 70, each of you can open an IRA. You cannot both participate in the same IRA. If you file a joint return, only one of you needs to have compensation.

From the IRS website.  You can have a 401k and IRA for yourself, and your spouse can have an IRA even if he/she does not work (as long as you file taxes as "married filing jointly."  And as long as your earned income is equal to or greater than the amount you put in the 401k/IRA/IRA.  The fact that you have a 401k essentially has no bearing on whether or not you or your spouse can have IRAs.

ender

  • Magnum Stache
  • ******
  • Posts: 4771

cheapdad

  • 5 O'Clock Shadow
  • *
  • Posts: 22
Re: 401k/IRA question
« Reply #3 on: September 20, 2014, 10:42:20 AM »
Awesome!  Thanks for the help!

dividendman

  • Handlebar Stache
  • *****
  • Posts: 1128
  • Age: 37
Re: 401k/IRA question
« Reply #4 on: September 20, 2014, 01:16:32 PM »
You are also allowed to open an IRA with any amount of income, it just won't be tax deferred if your income is too high.

ender

  • Magnum Stache
  • ******
  • Posts: 4771
Re: 401k/IRA question
« Reply #5 on: September 20, 2014, 01:17:47 PM »
You are also allowed to open an IRA with any amount of income, it just won't be tax deferred if your income is too high.

Technically you have to have earned income to do so...

wtjbatman

  • Handlebar Stache
  • *****
  • Posts: 1313
  • Age: 35
  • Location: Missouri
Re: 401k/IRA question
« Reply #6 on: September 20, 2014, 03:04:34 PM »
You are also allowed to open an IRA with any amount of income, it just won't be tax deferred if your income is too high.

Technically you have to have earned income to do so...

You have to have at least as much earned income as you contribute to the IRA and spousal IRA. Which shouldn't be a problem if you are working and your spouse isn't, unless you are able to put >100% of your earned income into IRA's.