Posted on January 22nd, 2014

Consider making a regular IRA contribution. Contributions to traditional IRAs for tax year 2013, including deductible contributions by those eligible to make them, can be made as late as Apr. 15, 2014. A married client also should be reminded that he or she won’t be treated as an active participant in an employer-sponsored retirement plan subject to the usual joint filer’s IRA deduction phaseout (for 2013, between $95,000 and $115,000 of modified AGI) merely because his or her spouse is a participant. Instead, the non-active-participant-spouse’s IRA deduction phases out over $178,000 to $188,000 of modified AGI.

For 2013, one spouse has $150,000 of salary income and is covered by a retirement plan, but the other is a homemaker with no earned income. Their combined modified AGI is $175,000. The homemaker can contribute $5,500 to a traditional IRA ($6,500 if age 50 or older) as late as Apr. 15, 2014, and the couple can deduct the full amount on their 2013 return.

The extra benefit is that the income which builds up in these accounts accumulates and is not taxed until there is a payment made to you, its owner, as well as the net investment income surtax will  not apply at all. As you save, you get a tax deduction in the year applicable.