While contributions to Roth IRAs are not tax-deductible, contributions to a Traditional IRA may be deductible for the year
they were made, depending on the owner’s income tax filing status, modified adjusted gross income and eligibility to participate in a tax-qualified retirement plan through employment. If the Traditional IRA owner participates in an employer’s qualified retirement plan on any day in the tax year, the contributions' deductibility declines to zero between certain AGI ranges. The following table demonstrates this concept:
AGI Phase-Out: Limits for Deductible Traditional IRA
| Year |
Single Filer |
Joint Filer |
2001 |
$33,000 - $43,000 |
$53,000 - $63,000 |
2002 |
$34,000 - $44,000 |
$54,000 - $64,000 |
2003 |
$40,000 - $50,000 |
$60,000 - $70,000 |
2004 |
$45,000 - $55,000 |
$65,000 - $75,000 |
2005 |
$50,000 - $60,000 |
$70,000 - $80,000 |
2006 |
$50,000 - $60,000 |
$75,000 - $85,000 |
2007 and later |
$50,000 - $60,000 |
$80,000 - $100,000 |
A working spouse not covered by a retirement plan through employment may make a tax-deductible contribution of up to $2,000 annually to an IRA,
regardless of the other spouse’s coverage under an employer-sponsored retirement plan. When the couple’s AGI reaches $150,000, deductibility for such contributions begins to decline. It reaches zero at a joint AGI of $160,000. Non-deductible contributions to Traditional IRAs are permitted up to the allowable limit.
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