Contributing to a Traditional IRA can allow you to not only put away tax-deferred savings into retirement, but you could also be eligible for a tax deduction in the year of contribution. Read on to see if you can deduct your Traditional IRA contribution this year.
Do you or your spouse have earned income?
Earned income means income from wages, salaries, or bonuses. Examples of unearned income include investment income and inheritances. If you do not have any earned income for 2018, you will not be able to make an IRA contribution, deductible or not. If you do have earned income, move on to the next question.
At the end of this year, will you be age 70.5 or older?
If you answered “yes”, you will be ineligible to make a contribution to a Traditional IRA. However, you may still be able to contribute to a Roth IRA. Check out our “Can I make a Roth IRA Contribution?” flowchart. If you will be younger than 70.5 at the end of the year, continue reading.
Did you make a full contribution to a Roth IRA?
If you answered “yes”, you will be able to pick the ex-spouse that provides the greatest benefit. If not, your benefits will be based off the ex-spouse you were married to for longer than 10 years. Either way, move on to the next question.
Did the divorce occur at least two years ago?
If your divorce was less than two years ago and your ex-spouse has not filed for benefits, you will have to wait until they file for Social Security before you are eligible for benefits. If the divorce was greater than two years ago and you do not have plans to remarry (remember you must not remarry to be eligible for ex-spouse benefits), then you can claim benefits if you are at least 62 years of age.
Collecting Social Security benefits from an ex-spouse is complicated, and there are a lot of different requirements. Check out this flowchart to learn more.
If you would like to schedule a call to talk about the best strategies for Social Security, please give us a call at 303-440-2906 or click here to schedule a time to speak with us.
Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail email@example.com.
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