Note: for the purposes of IRA MAGI qualification, a person filing as Married Filing Separately, who did not live with his or her spouse during the tax year, is considered Single and will use the information on that page to determine eligibility.
For a Traditional IRA (Filing Status Married Filing Jointly or Qualifying Widow(er)):
If you are not covered by a retirement plan at your job and your spouse is not covered by a retirement plan, there is no MAGI limitation on your deductible contributions.
If you are covered by a retirement plan at work, and your MAGI is $98,000 or less, there is also no limitation on your deductible contributions to a traditional IRA.
If you are covered by a retirement plan at your job and your MAGI is more than $98,000 but less than $118,000, you are entitled to a partial deduction, reduced by 27.5% for every dollar over the lower limit (or 32.5% if over age 50), and rounded up to the nearest $10. If the amount works out to less than $200, you are allowed to contribute at least $200.
If you are covered by a retirement plan at your job and your MAGI is more than $118,000, you are not entitled to deduct any of your traditional IRA contributions for tax year 2015. You are eligible to make non-deductible contributions, up the annual limit, and those contributions can benefit from the tax-free growth inherent in the IRA account.
If you are not covered by a retirement plan at your job, but your spouse IS covered by a retirement plan, and your MAGI is less than $183,000, you can deduct the full amount of your IRA contributions.
If you are not covered by a retirement plan but your spouse is, and your MAGI is greater than $183,000 but less than $193,000, you are entitled to a partial deduction, reduced by 55% for every dollar over the lower limit (or 65% if over age 50), and rounded up to the nearest $10. If the amount works out to less than $200, you are allowed to contribute at least $200.
Finally, if you are not covered by a retirement plan but your spouse is, and your MAGI is greater than $193,000, you are not entitled to deduct any of your traditional IRA contributions for tax year 2015. You are eligible to make non-deductible contributions, up the annual limit, and those contributions can benefit from the tax-free growth inherent in the IRA account.
For a Roth IRA (Filing Status of Married Filing Jointly or Qualifying Widow(er)):
If your MAGI is less than $183,000, you are eligible to contribute the entire amount to a Roth IRA.
If your MAGI is between $183,000 and $193,000, your contribution to a Roth IRA is reduced ratably by every dollar above the lower end of the range, rounded up to the nearest $10. If the amount works out to less than $200, you are allowed to contribute at least $200.
If your MAGI is $193,000 or more, you cannot contribute to a Roth IRA.
Sterling Raskie, MSFS, CFP®, ChFC®
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.
Must you be employed to have AGI or can only SS and IRA distributions be considered?
Modified AGI is made from the components described in the article at this link.
I think what you’re asking is what income is used to determine eligibility for IRA contributions. This is a different figure, generally only W2 (wage) income or income from self-employment is counted to determine if you can make an IRA contribution. Social Security, IRA distributions, and other “unearned” income are not considered for IRA contributions.
Hope this helps –
jb