What happens to my ability to deduct a Traditional IRA if I'm also covered by a 401(k) at work?

Being an active participant in a workplace plan doesn't stop you from contributing to a Traditional IRA, but it can phase out your deduction based on income. The IRS sets modified adjusted gross income ranges, adjusted annually, above which your deduction shrinks and eventually disappears if you or your spouse are covered by an employer plan. If your income exceeds the range, you can still make a nondeductible contribution and file Form 8606 to track your basis, or skip straight to a Roth if eligible. When neither spouse has a workplace plan, the deduction is unlimited by income. Verify the current phase-out thresholds at irs.gov, since they change each year.