Married couples can have more attractive options when it comes to deducting a traditional IRA contribution.

I blogged about the Spousal IRA here:

During the video, I reference being covered by a 401(k). Any employer retirement plan at work (including but certainly not limited to 401(k) coverage) would make it difficult to deduct a traditional IRA contribution. See this IRS website for more information:

This video, the show notes, and any comments are for educational purposes only. They do not constitute tax, legal, financial, and/or investment advice for any person. Consult with your own advisors regarding your own matters….(read more)

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Marriage is a significant milestone in many people’s lives, symbolizing a commitment to share a life with another person. One area where marriage can have a financial impact is in tax planning, including the ability to deduct contributions to a traditional Individual retirement account (IRA).

An IRA is a retirement savings account that allows individuals to save for retirement with either tax-deductible contributions in the case of a traditional IRA or tax-free contributions in the case of a Roth IRA. While married couples can each contribute to their own IRAs, there are income limits that may affect the tax deductibility of contributions.

For couples who are married and filing jointly, the ability to deduct contributions to a traditional IRA is subject to income limitations based on whether the individual or their spouse is covered by a retirement plan at work. If neither spouse is covered by a retirement plan at work, both can make fully deductible contributions to a traditional IRA regardless of their income level.

If one spouse is covered by a retirement plan at work, there are income limitations on the tax deductible contributions for that spouse. For 2021, couples with a modified adjusted gross income (MAGI) of $105,000 or less can make fully deductible contributions to a traditional IRA. For couples with a MAGI between $105,000 and $125,000, there is a phase-out range where the deductible amount decreases. Couples with a MAGI above $125,000 are not eligible to deduct contributions to a traditional IRA if one spouse is covered by a retirement plan at work.

For couples where both spouses are covered by a retirement plan at work, the income limits for tax deductible contributions are even lower. The phase-out range for deductibility starts at a MAGI of $198,000 and ends at $208,000 for 2021.

Marriage can have a significant impact on financial planning, including retirement savings and tax deductions. Couples should discuss their financial goals and work together to maximize their retirement savings opportunities. Consulting with a financial advisor or tax professional can help couples understand the tax implications of contributing to a traditional IRA and develop a comprehensive financial plan that takes into account their unique circumstances. By making informed decisions about retirement savings, couples can work towards a secure financial future together.