Spousal IRAs (thank goodness) (pensions, spouse, social security, child support)

[Midpack]

I retired in 2011 but my spouse is still working. When I went to make 2012 and 2013 TIRA contributions for both of us, I read that without income you can't make IRA contributions period. Rut-row!

However, it appears that a working spouse can make contributions to all both IRAs as long as his/her AGI is more that total of all IRA contributions. So for over 50 that would be as long as AGI is more than $25K (2 x $6K for 2012 & 2 x $6.5K for 2013), we can still make contributions. At least I hope I'm reading it right...

[Ariadne22]

What does $25k have to do with it?

It is earnings for each year, stand alone, regardless if you make both 2012 and 2013 contributions in 2013.

You cannot deduct $25k in 2012 or 2013.

You deduct $12,000 on 2012 1040, even though you are making contribution in 2013, as long as the contribution is made no later than 4/15/2013.

You deduct $13,000 on 2013 1040.

Essentially, $12,000 for 2012, $13,000 for 2013 - as those contributions are deductible against ordinary income for that particular calendar year.

[Midpack]

Right, I didn't word the OP very well, and deductions were an aside to my post. My main point was that we could contribute to both IRAs even though one spouse has no income for 2012. Once we both retire, IRA contributions won't be allowed at all...

[accufitgolf]

Mid

Basically one can fund IRA's if they still have earned income. You could be retired on SS and if you have earned income, you could still be funding IRA's. After I started collecting SS, I had a part time job that did not effect my SS but also gave me enough earned income that I kept funding my IRA's.

People would say you cannot do that......little did they know. It is all in having earned income.

Hope this helps.

[Midpack]

I don't have any earned income, the thread was meant to discuss how the (working) spousal IRA works in that case. Your example does not include address the spousal IRA clause.

However...as I understand it in your example, your IRA contribution would be limited to your AGI, though it would only take an AGI of $6,000 to max out a 2012 IRA contribution. Just to be clear, things such as interest and dividends from investments, pensions, Social Security benefits, unemployment benefits, alimony and child support—even though they may factor significantly in your monthly bottom line—aren't considered earned income for tax and IRA contribution purposes.

http://www.irs.gov/publications/p590/ch01.html

[arwenmark]

Basically I think the previous poster was saying that after retirement you could still fund the IRA if you were still working, or your spouse was, even a part time job in retirement.

I think it was in response to the line in your post that, " Once we both retire, IRA contributions won't be allowed at all"

[Midpack]

Originally Posted by arwenmark

Basically I think the previous poster was saying that after retirement you could still fund the IRA if you were still working, or your spouse was, even a part time job in retirement.

I think it was in response to the line in your post that, " Once we both retire, IRA contributions won't be allowed at all"

Fair enough. Maybe I'm too literal, but to me it's not "retirement" if you're still working (at all), but I understand.

[MadManofBethesda]

Originally Posted by Midpack

Fair enough. Maybe I'm too literal, but to me it's not "retirement" if you're still working (at all), but I understand.

LOL, no I think you make perfect sense. But now this thread is going to go off on a tangent with people trying to explain their position that one can work and still be "retired."

re·tire·ment

/riˈtīrmənt/


Noun

• The action or fact of leaving one's job and ceasing to work.
• The period of one's life after leaving one's job and ceasing to work.

It is others that stretch the term "retirement"

[mathjak107]

the new non dictionary meaning of retired seems to be :

leaving your job and not necessarily not working, just the fact you don't necessarily need to work.

[Ariadne22]

One cannot contribute to a tax-deferred IRA after the age of 70-1/2, no matter how much you earn.

You can contribute to a Roth IRA beyond the age of 70-1/2:

Tax Topics - Topic 451 Individual Retirement Arrangements (IRAs)

There is no immediate tax break for the Roth contribution, but there is also no RMD requirement, either.

I always used IRAs for the tax-deferred feature. If I were working now, I certainly would want that ability - otherwise my SS benefit would be seriously affected by taxes.