By Sarah Brenner, JD
Director of Retirement Education
If you have compensation (or “earned income”), you can always contribute to a traditional IRA, but your traditional IRA contribution may not always be deductible. (Roth IRA contributions are never deductible.)
One factor for determining IRA deductibility is whether a worker is an “active participant” in a retirement plan at work. (This is sometimes referred to as “being covered” by a workplace plan.) If neither you nor your spouse (for those married filing jointly) has a retirement plan through an employer — no 401(k), no SEP, no SIMPLE, etc., then neither of you is “covered,” and each can deduct a traditional IRA contribution. Single filers not covered by an employer plan also qualify for a deductible IRA contribution.
Your W-2 form will usually indicate if you are covered by a work plan or not. If you are not covered by a work plan, there should NOT be a check in the “retirement plan” box (Box 13) on the W-2. If there is no checkmark and compensation was earned, a traditional IRA contribution can be deducted. The amount earned is irrelevant. (Be careful – sometimes employers mistakenly complete Box 13, so if any questions exist, it is advisable to confirm with the employer.)
If you are/were an active participant in an employer plan, you must consider the phase-out ranges for traditional IRA deductibility. For 2026, if you are a married active participant in a plan, your ability to deduct your traditional IRA contribution will phase out when your modified adjusted gross income (MAGI) is between $129,000 and $149,000.
Even if you are not an active participant, you may still not be able to deduct your traditional IRA contribution if you are married. There is another IRA deductibility phase-out range when one spouse is covered by an employer plan and the other is not. The covered spouse uses the married/filing joint phase-out ranges mentioned above. The uncovered spouse is permitted a higher phase-out range. If you are not covered by an employer plan but your spouse is, the MAGI phase-out range for 2026 is $242,000 – $252,000.
Example: Uma is an active participant in her company’s 401(k) plan. Her husband, Josh, works for a company that does not offer a retirement plan. For 2026, their MAGI is $300,000. If Josh makes a traditional IRA contribution for 2026, he cannot deduct any part of it because his spouse, Uma, is an active participant in a workplace retirement plan and their income exceeds $252,000. (Uma also could not make a deductible IRA contribution for 2026.)
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.