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USAA is The American Legion's preferred provider of financial services. Offering a range of top-rated financial and insurance products and services. USAA welcomes honorably discharged U.S. military veterans, active-duty troops and qualified family members and descendants of those who have served. USAA contributes funds to American Legion programs when members join through a dedicated channel:
usaa.com/legion or by calling toll-free at 1-877-699-2654.

Financial Questions & Answers

Financial Questions & Answers

Question:

My wife has a 401K at work, and we would like to use IRAs or Roth IRAs this year when doing our taxes. Can we both take a $6,000 IRA when doing our taxes? – Robert

Answer:

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.