If lower, your taxable compensation for the year. If your income exceeds these limits, you can still contribute money to a traditional IRA. However, the contribution you make will not be tax-deductible. Remember that you are also not subject to income limits when you make contributions to a SIMPLE IRA or an SEP IRA; options that are only available if your employer offers them, if you are a small business owner, or if you are self-employed and can open one on your own.
You may still want to make a non-deductible contribution, either because you prefer to allow your investments to grow tax-free and defer income taxes or because you want to make a clandestine contribution to the Roth IRA by contributing to your traditional IRA and then converting it into a Roth account. Yes, you can contribute to an IRA for your unemployed, non-working spouse who files a joint return, but your combined total contribution cannot exceed your combined taxable income or double the annual IRA limit, whichever is less. The five-year Roth IRA rule states that you can't withdraw your earnings tax-free until at least five years after you've first contributed to a Roth IRA. Converting to a Roth IRA from a taxable retirement account, such as a 401 (k) plan or a traditional IRA, has no impact on the contribution limit; however, making a conversion increases the MAGI and may cause or increase the phasing out of the Roth IRA contribution amount.
While a Roth IRA has a strict income limit and people with incomes above it can't contribute at all, that rule doesn't apply to a traditional IRA. However, if you or your spouse are covered by an employment retirement plan, there are income limits for making tax-deductible contributions to traditional IRAs. If your spouse is covered by a plan at work, there's also a limit to the amount of tax-deductible contributions you can make to your traditional IRA each year. Every year you make a contribution to the Roth IRA, the custodian or trustee will send you Form 5498 with information about IRA contributions.
While there are ways to introduce money behind closed doors into a Roth IRA, such as contributing to a traditional IRA and converting to Roth, you can't invest money directly in a Roth IRA if your income exceeds the annual limit. The ability to make non-deductible contributions regardless of income level makes traditional IRAs a valuable retirement savings account that can be converted into a clandestine Roth IRA.