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Q&A: "My Wife and I Are Over 50 and Both Contributing to Retirement Plans at Work...Can We Both Put $23,000 into Each Plan?"

Retirement Accounts Tax

Question and background: 

My wife is over 50 and in a 403(b) plan. I am over 50 and contributing to a 401(k) plan. Can we both put $23,000 into each plan? If that answer is yes, can we put more money into a Roth or IRA as well?


You're correct that you both can contribute up to $23,000 through payroll into your respective retirement plans at work.

Additionally, you can contribute up to $6,500 each to an IRA in 2014, but the type of IRA and tax deductibility depends on your Modified Adjusted Gross Income (MAGI) level. 

Deductibility of a contribution to a Traditional IRA for a married couple filing jointly phases out at 2014 MAGI between $96,000 to $116,000.

If your joint MAGI is too high for a Traditional IRA deduction, then you may be able to make non-deductible contributions to respective Roth IRAs. Eligibility to contribute phases out for a married couple filing jointly at 2014 MAGI between $181,000 to $191,000. 

And if your joint 2014 MAGI is still too high, you can circle back and make a non-deductible contribution to a Traditional IRA, and then consider the so-called "back door" Roth IRA conversion strategy if that fits your situation.

For many people, Modified Adjusted Gross Income (MAGI) will be the same as their Adjusted Gross Income (AGI) at the bottom of p.1 of their federal tax return. But with MAGI, you have to add back certain items like: student loan interest deduction, Traditional IRA deduction, tuition and fees deduction, one-half of self-employment tax, and so forth. 

Hope that helps. All the best!