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Question: Can my client, who also participates in a SEP IRA, make a nondeductible contribution to a traditional IRA in 2011?

Answer: Unlike the rules with regard to Roth IRA or deductible traditional IRA contributions, there is no maximum amount a client can earn while being eligible to make a nondeductible contribution to a traditional IRA—even if the client participates in another pension plan.

Any taxpayer is eligible to make a nondeductible traditional IRA contribution, so long as they are

• younger than 70 ½ in the year of contribution, and
• have earned income at least as big as the contribution.

Nondeductible IRA contributions must be coordinated with deductible IRA or Roth IRA contributions.  The maximum that can be contributed to any combination of those accounts is $5,000 in 2011 for a taxpayer younger than 50, $6,000 for those 50 or older.

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