Retirement Planning/deductible IRA


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First of all it's great that someone is available to ask a specific question to-thanks for this site.

I was employed in January 2015 and have a 401(k) plan with that employer. Then I was self-employed for 6 months. I'd like to make a deductible IRA contribution for 2015. My wife has a part-time job and does not have a 401(k) plan with her employer. She will be making an IRA contribution. We don't have any income levels that would require partial contributions. We are both over 50. Question 1 is can I make a deductible for 2015?

Question 2 relates to 2016. I will not have any taxable income other than a modest amount of interest. If my wife has a W2 totaling $12,500 and takes a $6,500 IRA deduction herself-can I make a $6,000 deductible IRA contribution (using the Kay-Baily-Hutchinsen exception?

Richard E. Reyes, CFP
Richard E. Reyes, CFP  
Thank you for taking the time to send your question. Hopefully I can give you some simple guidance.

Your eligibility to claim a deduction for your Traditional IRA contribution on your federal tax return depends on whether you are an active participant of an employer-sponsored plan in the year to which your deduction applies. If you contribute to your 401(k) account, you may still contribute to a Roth IRA and/or a Traditional IRA; however, your participation in the 401(k) plan may affect your ability to take a tax deduction for any Traditional IRA contributions. It will not affect the amount you are able to contribute into your IRA for 2015. You have realistically till April 15,2016 (Tax Day) to make your contributions into an IRA.

IRA contributions are based on eligible compensation which your wife will have. She can therefore make a contribution into her IRA. Even though you will not have eligible compensation, since you are married you will also be able to make full IRA contribution as a spouse.

I would certainly take some time to review your particular situation with a Certified Financial Planner who is educated and works with distribution and retirement planning. We are not all cut from the same cloth. This person will be able to provide you better guidance after taking a detailed overview of your financial picture and see if how to best structure the contributions. There might be a better solution than stick everything into taxable accounts. Remember, taxes are an expense. The more taxes you pay during retirement, the less money you have to spend on you.

Hope this helps.  

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Richard E. Reyes, CFP


I can provide answers to questions relating to retirement especially relating to; income distribution, tax efficiency, long-term care insurance, life insurance, estate planning, asset protection, variable and fixed annuities, alternative investments and prudent portfolio design.


Through the years Richard has built a reputation as one of Central Florida's expert on retirement income distribution by providing sound, unbiased wealth coaching. We believe that Financial Planning is the problem and Wealth Coaching is the solution. The Wealth Coaching process gives you Peace of Mind, so you can stop worrying about your future. It helps you find happiness as it guides you in the TRUTH of investing, by teaching you how to make wise choices as you journey through your life’s stages. It is all about your relationships and what you value, not your net worth.

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B.S. University of Florida, Gainesville, FL
CFP Certificate, University of Central Florida, Orlando, FL

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