7 Missed IRA Opportunities (Updated for 2026)

Posted On March 31, 2019 By Scott Stratton, CFP(R), CFA In Retirement Planning, Tax Strategies /

Many investors assume they are not eligible to contribute to an IRA, often because their income is “too high” or because they are no longer working full-time. In practice, those assumptions are frequently wrong.

Over the years, I’ve seen many thoughtful, financially responsible investors miss perfectly legal and valuable IRA opportunities simply because they misunderstood the rules.

This article highlights seven common situations where investors think they can’t contribute to an IRA — but actually can.

Many of these overlooked IRA opportunities become clear only when viewed through the lens of long-term tax planning for retirees, rather than focusing on eligibility rules in isolation.

1. You’re Married and Only One Spouse Is Working (Spousal IRA)

A surprisingly common misconception is that each spouse must have earned income to contribute to an IRA.

That is not true.

If you are married filing jointly and one spouse has earned income, the non-working spouse may still contribute to an IRA using a Spousal IRA.

Key points for 2026:

Contributions are based on combined earned income
Each spouse can contribute up to the annual IRA limit
The account is owned individually, not jointly

This is often overlooked when one spouse steps away from work to raise children, care for family, or transitions into early retirement.

2. You Earn Too Much for a Roth IRA (But Not for a Traditional IRA)

Many investors correctly understand that Roth IRA contributions have income limits, but then incorrectly assume that means no IRA contributions at all.

That is not the case.

Even if your income exceeds Roth limits:

You may still contribute to a Traditional IRA
The contribution may be non-deductible, but it still offers tax-deferred growth
Non-deductible contributions can later be coordinated with Roth conversion strategies

Eligibility and deductibility are two separate concepts — and confusing them causes many investors to miss opportunities.

3. You’re Not Covered by an Employer Retirement Plan

Here is one of the most misunderstood IRA rules.

If neither you nor your spouse is covered by a workplace retirement plan, then:

There are no income limits on deducting a Traditional IRA contribution
You may be able to fully deduct the contribution, regardless of income

Many investors mistakenly believe income alone disqualifies them, when in reality coverage by an employer plan is the key factor.

This is especially relevant for:

Small business owners
Consultants
Part-time workers
Early retirees with earned income

4. You Are Self-Employed (SEP IRA Opportunity)

Self-employed individuals often assume they’ve “missed the boat” on retirement savings if they didn’t set up a 401(k).

In reality, SEP IRAs remain a powerful and flexible option.

For 2026:

Contributions are based on net self-employment income
SEP IRAs allow significantly higher contribution limits than traditional IRAs
Contributions are deductible and can be made up until the tax filing deadline (including extensions)

This is commonly missed by freelancers, consultants, and small business owners who underestimate what they are allowed to do.

5. You Can Contribute to Both a SEP IRA and a Roth IRA

Another frequent misunderstanding is assuming you must choose one type of IRA only.

In fact:

A SEP IRA contribution does not prevent you from contributing to a Roth IRA (if income allows)
These serve different planning purposes: current deduction vs. tax-free growth

Used together thoughtfully, they can provide valuable tax diversification.

6. You Think You’re “Too Old” to Contribute

Prior to 2020, age limits restricted Traditional IRA contributions. That rule no longer exists.

As long as you have earned income:

You may contribute to a Traditional IRA at any age
Roth IRA contributions also have no age limit (subject to income rules)

This is especially helpful for:

Part-time workers in their 60s or 70s
Individuals consulting after “retirement”
Spouses with earned income later in life

7. You Assume IRA Contributions Aren’t Worth It Anymore

Some investors believe IRA contributions are only useful early in life and lose relevance as retirement approaches.

That thinking overlooks:

The power of tax-deferred or tax-free growth
The role IRAs play in retirement income planning
How IRA balances interact with RMDs, Medicare premiums, and tax brackets

Even modest contributions, when coordinated properly, can improve long-term outcomes.

For broader context, see:

Why These Opportunities Get Missed

Most missed IRA opportunities are not the result of carelessness. They happen because:

IRS rules are complex and nuanced
Eligibility depends on multiple variables
Many investors rely on outdated or incomplete information
General rules are applied without considering personal circumstances

This is why thoughtful planning — not just contribution limits — matters.

How a Fiduciary Advisor Can Help

Part of my role as a fiduciary advisor is helping clients understand what they are actually eligible to do, not just what they’ve been told they can’t do.

That includes:

Reviewing earned income and coverage rules
Coordinating IRA decisions with tax planning
Ensuring contributions align with broader retirement goals
Avoiding missed opportunities due to misunderstandings

You don’t need aggressive strategies — you need clarity and accuracy. This topic is often part of a broader retirement or tax planning conversation. If you’d like help applying these ideas to your own situation, you can request an introductory conversation here.

Frequently Asked Questions

Can a non-working spouse contribute to an IRA?
Yes. If you file jointly and your spouse has earned income, a non-working spouse can contribute to an IRA using a Spousal IRA.

Can I deduct a Traditional IRA if my income is high?
Possibly. If you are not covered by an employer retirement plan, income limits may not apply.

Can I contribute to a SEP IRA and a Roth IRA?
Yes, provided you meet the eligibility rules for each.

Roth Conversions Under the New Tax Law

Posted On December 2, 2018 By Scott Stratton, CFP(R), CFA In Retirement Planning, Tax Strategies /

Everybody loves free stuff, and investing, we love the tax-free growth offered by a Roth IRA. 2018 may be a good year to convert part of your Traditional IRA to Roth IRA, using a Roth Conversion. In a Roth Conversion, you move money from your Traditional IRA to a Roth IRA by paying income taxes on this amount. After it’s in the Roth, it grows tax-free.

Why do this in 2018? The new tax cuts this year have a sunset and will expire after 2025. While I’d love for Washington to extend these tax cuts, with our annual deficits exploding and total debt growing at an unprecedented rate, it seems unavoidable that we will have to raise taxes in the future. I have no idea when this might happen, but as the law stands today, the new tax rates will go back up in 2026.

That gives us a window of 8 years to do Roth conversions at a lower tax rate. In 2018, you may have a number of funds which are down, such as Value, or International stocks, or Emerging Markets. Perhaps you want to keep those positions as part of your diversified portfolio in the hope that they will recover in the future.

Having a combination of both lower tax rates for 2018 and some positions being down, means that converting your shares of a mutual fund or ETF will cost less today than it might in the future. You do not have to convert your entire Traditional IRA, you can choose how much you want to move to your Roth.

Who is a good candidate for a Roth Conversion?

1. You have enough cash available to pay the taxes this year on the amount you want to convert. If you are in the 22% tax bracket and want to convert $15,000, that will cost you $3,300 in additional taxes. That’s painful, but it saves your from having to pay taxes later, when the account has perhaps grown to $30,000 or $45,000. Think of a conversion as the opportunity to pre-pay your taxes today rather than defer for later.

2. You will be in the same or higher tax bracket in retirement. Consider what income level you will have in retirement. If you are planning to work after age 70 1/2 or have a lot of passive income that will continue, it is entirely possible you will stay in the same tax bracket. If you are going to be in a lower tax bracket, you would probably be better off not doing the conversion and waiting to take withdrawals after you are retired.

3. You don’t want or need to take Required Minimum Distributions and/or you plan to leave your IRA to your kids who are in the same or higher tax bracket as you. In other words, if you don’t even need your IRA for retirement income, doing a Roth Conversion will allow this account will grow tax-free. There are no RMDs for a Roth IRA. A Roth passes tax-free to your heirs.

One exception: if you plan to leave your IRA to a charity, do NOT do a Roth Conversion. A charity would not pay any taxes on receiving your Traditional IRA, so you are wasting your money if you do a conversion and then leave the Roth to a charity.

The smartest way to do a Roth Conversion is to make sure you stay within your current tax bracket. If you are in the 24% bracket and have another $13,000 that you could earn without going into the next bracket, then make sure your conversion stays under this amount. That’s why we want to talk about conversions in 2018, so you can use the 8 year window of lower taxes to make smaller conversions.

2018 Marginal Tax Brackets (this is based on your taxable income, in other words, after your standard or itemized deductions.)

	Single	Married filing Jointly
10%	$0-$9,525	$0-$19,050
12%	$9,526-$38,700	$19,501-$77,400
22%	$38,701-$82,500	$77,401-$165,000
24%	$82,501-$157,500	$165,001-$315,000
32%	$157,501-$200,000	$315,001-$400,000
35%	$200,001-$500,000	$400,001-$600,000
37%	$500,001 or more	$600,001 or more

On top of these taxes, remember that there is an additional 3.8% Medicare Surtax on investment income over $200,000 single, or $250,000 married. While the conversion is treated as ordinary income, not investment income, a conversion could cause other investment income to become subject to the 3.8% tax if the conversion pushes your total income above the $200,000 or $250,000 thresholds.

You used to be able to undo a Roth Conversion if you changed your mind, or if the fund went down. This was called a Recharacterization. This is no longer allowed as of 2018 under the new tax law. Now, when you make a Roth Conversion, it is permanent. So make sure you do your homework first!

Thinking about a Conversion? Want to reduce your future taxes and give yourself a pool of tax-free funds? Let’s look at your anticipated tax liability under the new tax brackets and see what makes sense your your situation. Email or call for a free consultation.

Don’t Miss Out on a Roth IRA

Posted On January 25, 2017 By Scott Stratton, CFP(R), CFA In Retirement Planning /

I am a big fan of the Roth IRA and think it is an underutilized tool for investors. There are many people who are eligible for a Roth and are not participating. If you have a chance to put money into an account where it grows tax-free, why would you not want to contribute?

If you have a 401(k) at work, your first goal should be to maximize contributions to that account. For 2017, you can invest $18,000 into a 401(k), or $24,000 if you are age 50 or older. Your 401(k) contribution is tax deductible.

But whether or not you max out your 401(k) contributions, many families are missing the opportunity to also contribute to a Roth IRA. YES, you can be eligible for a Roth even if you participate in a retirement plan at work. More people should be trying to do both. Even if you do invest $18,000 a year into a 401(k), who says that will be enough to retire?

For the 2016 tax year, you can contribute $5,500 to a Roth IRA if your modified adjusted gross income (MAGI) is below $117,000 (single) or $184,000 (married). If you are over age 50, you can contribute $6,500. Contributions must be made by April 15, 2017 to count as a 2016 contribution.

Many investors are contributing to their 401(k) plan and say they don’t have additional income to contribute to an IRA. But if you have a taxable investment account, you could use money from that account to fund your Roth. If you aren’t planning to touch that money, don’t leave it in a taxable account, put it into an account that grows tax-free!

Here are a couple of important points to know about the Roth IRA:

With a Roth IRA, if you need to access your money before age 59 1/2, you can withdraw your principal (your original investment amount) without taxes or penalty. It is only if you withdraw earnings, would you be subject to a penalty and taxes before age 59 1/2, and even then only on the earnings portion.
If you’re married, as long as your income is below the $184,000 threshold, both or either spouse can contribute to the Roth IRA. It doesn’t matter if one spouse doesn’t work outside the home, you’re both eligible.
If you make too much to contribute to a Roth IRA, AND you do not have any Traditional IRAs, you may be a candidate to make a “Back-door Roth Contribution”. Read how here.
For investors who are over age 70 1/2, you are allowed to contribute to a Roth IRA but not a Traditional IRA. Again, put your money into the tax-free account if you are eligible!

The biggest problem with the Roth IRA is that the contribution limit is so low. When you miss a year of contributions, you can’t get that opportunity back later. So don’t miss out. If you are eligible for a Roth for 2016 and haven’t funded it, don’t delay. Call me today.

Five Ways To Invest Tax-Free

Posted On February 29, 2016 By Admin In Financial Planning /

“It doesn’t matter how much you make, but how much you keep.” Over time, taxes can be a significant drag on returns, especially for those who are in the higher tax brackets. Today, many families are also hit with the 3.8% Medicare surtax on investment income. If you are in the top tax bracket, you could be paying as much as 43.4% (39.6% plus the 3.8% Medicare surtax) for interest income or short-term capital gains.

The Secret Way to Contribute $35,000 to a Roth IRA

Posted On August 10, 2015 By Scott Stratton, CFP(R), CFA In Retirement Planning /

Roth IRAs are incredibly popular and for good reason: the ability to invest into an account for tax-free growth is a remarkable benefit. Unlike a Traditional IRA or Rollover IRA, there are no Required Minimum Distributions, and you can even leave a Roth IRA to your heirs without their owing any income tax. For retirement income planning, $100,000 in a Roth IRA is worth $100,000, whereas $100,000 in a Traditional IRA may only net $60,000 to $75,000 after you pay federal and state income taxes.

The only problem with the Roth IRA is that many investors make too much to be able to contribute and even those who can contribute are limited to only $5,500 this year. If you’re a regular reader of my blog, you may recall a number of posts about the “Back-Door Roth IRA”, which is funded by making a non-deductible Traditional IRA contribution and immediately making a Roth Conversion.

But there is another way to make much bigger Roth contributions that is brand new for 2015. Here it is: many 401(k) plans offer participants the ability to make after-tax contributions. Typically, you wouldn’t want to do this. You’d be better off making a tax-deductible contribution.

When you separate from service (retire, quit, or leave) and request a rollover, many 401(k) plans have the ability to send you two checks. One check will consist of your pre-tax contributions and all earnings, and the second check will consist of your after-tax contributions.

What can you do with these two checks? This was a gray area following a 2009 IRS rule. If the distributions were from an IRA, you would have to treat all distributions as pro-rata from all sources; i.e. each check would have the same percentage of pre-tax and after-tax money in it.

Remarkably, the IRS ruled in 2014 that when a 401(k) plan makes a full distribution, it can send two checks and each check will retain its unique character as a pre-tax or after-tax contribution. No pro-rata treatment is required. This will allow you to rollover the pre-tax money into a Traditional IRA and the after-tax money into a Roth IRA. This rule applies only when you make a full distribution with a trustee to trustee transfer.

Since this is a new rule for 2015, it is likely that your HR department, 401(k) provider, and CPA will have no idea what you are talking about, if you ask. Refer them to IRS Notice 2014-54. Or better yet, refer them to me and I can explain it in plain English!

Even though the salary deferral limit on a 401(k) is only $18,000, the total limit for 2015 is actually $53,000 or 100% of income. So you should first contribute $18,000 to your regular, pre-tax 401(k). Assuming there is no company match or catch-up, you could then contribute another $35,000 to the after-tax 401(k) to reach the $53,000 limit.

Let’s say you do this for five years and then retire or change jobs. At that point, you would have made $175,000 in after-tax contributions which could be converted into a Roth IRA, and since your cost basis was $175,000, there would be no tax due.

The earnings on the after-tax 401(k) contributions would be included with your other taxable sources of funds and rolled into a Traditional IRA. Only your original after-tax contributions will be rolled into the Roth account. Please note that this two-part rollover only works when you separate from service and request a FULL rollover. You may not elect this special treatment under a partial withdrawal or an in-service distribution.

Lastly, before attempting this strategy, make sure your 401(k) plan allows for after-tax contributions and will send separate checks for pre-tax and after-tax money. While this strategy is perfectly legal and now explicitly authorized by the IRS Notice, 401(k) plans are not required to allow after-tax contributions or to split distribution checks by sources. It’s up to each company and its plan administrator to determine what is allowed. The IRS Notice stipulates that this process is also acceptable for 403(b) and 457 plans, in addition to 401(k) plans.

Not sure if this works with your 401(k)? Call me and I will review your plan documents, enrollment and distribution forms, and call your plan administrators to verify. I think this would be a great approach for someone who is a handful of years away from retirement who wanted to stuff as much as possible into retirement accounts. Additionally, anyone who has the means to contribute more than $18,000 to their 401(k) each year might also want to consider if making these after-tax contributions would be a smart way to fund a significant Roth IRA.