If I contribute to a 401K plan, can I open IRA to reduce taxes?
Regarding the ability to open IRA to reduce taxes, you might be able to contribute deductible amounts to an IRA. It depends on your income.
You can contribute the lesser of:
- 100% of your annual compensation
- 5500 — 6500 if age 50 or older
However, if you’re covered by a retirement plan at work, your IRA deduction will be reduced or phased out. This is true if your modified adjusted gross income (AGI) is:
- More than 58000 but less than 72000 if filing single or head of household
- More than 92000 but less than 119000 if married filing jointly
- More than $0 but less than 10000 if married filing separately
If your income is more than these limits, and you open IRA to reduce taxes, you can still make the contributions, but you cannot deduct them.
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