Hi I am on H1 and have earned income and I participate in 401k & roth 401

My wife is on H4 Visa and hence has no Earned Income. She doesnot work. But we wish to open 401k roth or IRA for her. Is it possible. She doesnot have earned income but I can give her money for IRA/Roth etc?

Second- If above is possible- Will she get 10% or applicable % as per " Savers Credit"?

Your wife may participate in an IRA account but not a 401(k). A 401(k) is a plan sponsored by one's employer - obviously if your wife isn't employed she has no employer. An IRA on the other hand is an "individual retirement account," and she may establish an IRA as long as you have taxable earned income, you file jointly, and she is under age 70-1/2.

As for the saver's credit - yes, it counts, as long as your joint income is less than $55.5K.

You mnay want to read Pub 590 for details on this: http://www.irs.gov/pub/irs-pdf/p590.pdf

OK.. how about 401k roth? Can my wife participate w/o having earned income ?

Another question- If I open an IRA on my wife's name- she gets qualified for savers credit right?


Another question- I contributed 4k to my 401k under my name. I qualify for savers credit 10%. I file jointly. I only got $200 rebate? Don't I get $400 rebate?

To repeat: you wife can not have a 401(k) plan unless her employer offers one. She is not employed; therefore she can not participate in a 401(k). It does not matter whether you are asking about a "regular" 401(k) or a Roth 401(k). However, she can contribute to an IRA, and it may be either a traditional IRA or a Roth IRA.

As for the saver's credit - it is a credit on your JOINT tax return. The maximum contribution that qualifies for the credit is $2000 per person, so if you actually save $4000 in your company's 401(k) plan you can get a credit based on only $2000, and if your income is such that the credit is 10% that means you qualify for a $2000 x 10% = $200 credit. Similarly, if your wife contributes $4K to her IRA that would qualify for an additional $200 credit.

This web site may help you understand better how the rules work:
http://www.irs.gov/publications/p590/ch05.html

Thanks Ebaines... It helps me...

Last question

So to take advantage of Savers credit for my wife, I plan to open IRA Roth or IRA. Curious..

What is the latest date you can start up an IRA? And take advantage in 2010 returns

You may establish or contribute to an IRA for tax year 2010 any time up until the earlier of:

a. April 15 2011, or
b. The date you file your 2010 tax return.