Any worker up to age 70 ½, can make a regular IRA contribution - no questions asked. Your ability to deduct that contribution, however, is based on ever-changing annual limits.
Ironically, things are simpler if you do not have a workplace retirement plan, such as a 401(k) or 403(b). If so, your regular IRA contributions are fully tax deductible regardless of income. Keep in mind the amount of the limits can change each year based on inflation, so note the 2011 IRA contribution limits.
If you are covered by a retirement plan at work, you might be eligible to make a tax-deductible IRA contribution, depending on your modified adjusted gross income (MAGI).
2011 Deductible IRA Income Limits for Singles
If you are single individual eligible to participate in a workplace retirement plan, the deductibility of your IRA contribution begins to phase out at $56,000 MAGI in 2011. Deductibility disappears entirely for covered-at-work singles at $66,000. The income levels for a 2011 IRA deduction limits are the same for singles as they were in 2010.
2011 Deductible IRA Income Limits for Married Couples
For joint-filers, the phase-out starts at $90,000 of MAGI. Should you make $110,000 or more, your IRA contribution deduction disappears completely. Both the top and the bottom of the phase-out range increased by a $1,000 over 2010's levels.
Frustrated? If you are eligible to participate in a retirement plan at work but your spouse isn't, don't give up yet.
A spouse without a workplace retirement plan can make a tax-deductible contribution as long as the couple's joint income is below $169,000 in 2011, up $2,000 from 2010. The deductible amount phases out completely at $179,000, also up $2,000 from 2010.
Keep in mind: a spousal IRA contribution can be made even if the spouse does not earn an income himself/herself.