I am single and my Gross Income for 2006 is 70000 $. I have contributed around 3000 $ to 401K in year 2006.
Can I fund a traditional IRA as well for year 2006 ??
2007-02-18 16:42:56 · 4 answers · asked by maveric_neo 1 in Business & Finance ➔ Personal Finance
My funding the traditional IRA I mean can i contribute and claim tax deductions. If so how much can I contribute ?
2007-02-18 16:48:12 · update #1
No, those first answers are WRONG.
You cannot get a tax deduction on an IRA if you are eligible for a 401k. The exception is if your income is less than $50,000. But if you make that much, you probably can't afford to fund both. That's why there is a box on your W-2 that says whether you are eligible for one, so the IRS knows whether to allow the deduction for the IRA. This is just eligible - even if you don't participate. And that applies if your spouse is eligible too.
Your best option is to open a Roth-IRA.
2007-02-19 05:12:46 · answer #1 · answered by Quixotic 3 · 0⤊ 0⤋
You may contribute up to $4000 (or $5000 if you're 50+) for the 2006 tax year and get the tax deduction. IRAs are totally independent of a 401k as far as taxes go.
2007-02-18 16:51:53 · answer #2 · answered by torklugnutz 4 · 0⤊ 0⤋
The 1st answer is correct on the limits and you are under the compensation limit to loose your IRA deduction. You might want to consider using a Roth IRA. You can go to a mutual fund web site and use a calculator to see if a Roth might end up being more valuable to you in the long run. $$$$
2007-02-18 19:23:54 · answer #3 · answered by Marty 1 · 0⤊ 0⤋
Your first answer is 100% correct.
2007-02-18 16:54:44 · answer #4 · answered by Uncle Pennybags 7 · 0⤊ 0⤋