401k a retirement plan?

I have a 401K through my company and my wife doesn't. If I start one for her will we be able to deduct those contributions?

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Reply to
cptkirkh
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You can't start a 401K for your wife, unless you own a company and hires her. Only her employer can offer her a

401K plan.
Reply to
PeterL

You can't start a 401(k) for her. Only employers can establish those plans. She can make a $4,000 traditional IRA contribution which will be deductible if your joint AGI is under $150,000. See IRS Publication 590.

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

snipped-for-privacy@scic.com (cptkirkh) posted:

A 401K is an instrument which must be offered by the company itself. If her company offers this option and she meets the requirements to join the plan (sometime related to duration of employment), she could join. Otherwise, you could make contributions to a traditional IRA

-- and still may for the tax year 2006, up until April17 (the final date for filing this year). That would require selecting a trustee, or custodian, for her IRA and filling out the necessary documents, plus depositing the amount contributed for 2006. IRA deductibility is tied to total income, and since your company offers a 401K, which is deemed a retirement plan, the limits on income are lowered. See Pub 590 (Individual Retirement Arrangements) for full info, or check either Pub

17 or 1040 Instructions for more limited information. Bill
Reply to
Bill

You can't "start one for her" at all. 401(k) is employer sponsored. She can establish an IRA. Depending on your income you may be able to deduct those contribs. I believe the phase out is $156K-$166K adjusted gross income. If your wife is self-employed there are other options such as SEP and SIMPLE IRAs or solo 401(k)s that allow larger contributions.

Reply to
kastnna

If your wife's employer has a 401(k) plan and your wife meets the eligibility criteria, she can join her employer's plan. Contributions to a 401(k) are made through payroll withholding. In addition, other than highly paid individuals, the contributions from the employee's pay are pre-tax. Therefore, there is no tax deduction for 401(k) contributions as that money was never taxed.

-- Alan

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Reply to
A.G. Kalman

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