The fact that your wife has a 401(k) at work does not impact your ability to contribute to an IRA or Roth IRA. However, you do need to have income that exceeds your combined contribution to either IRA ($12,000). Additionally, to be eligible to make a full 2010 Roth IRA contribution, your modified adjusted gross income must be less than $167,000. If you choose to use a traditional IRA, the fact that your wife is covered by a plan at work may limit or eliminate the ability to deduct a traditional IRA contribution.
We like the idea of “tax diversification.” In your situation, that could mean getting some tax benefit today by using your wife’s plan at work – pre-tax contributions – and building a tax-free component to your retirement income stream with the Roth IRA. Although a Roth contribution won’t help your taxes today, it may provide tax relief in the future. If you have questions on deductibility or eligibility, check out IRS Publication 590.