Coverage under a retirement plan maintained by your employer does not affect your ability to contribute to a Roth IRA. If you meet the requirements described below, you can contribute to a Roth IRA even if you participate in an employer plan such as a 401k. Even if you contribute to a Roth 401k account, your contributions to a Roth IRA are unaffected.

But you have to meet certain requirements, they are your adjusted gross income cannot exceed certain limits and your income must be qualifying compensation

Compensation or Alimony Income
For each year you contribute to a Roth IRA, you (or your spouse, if you file jointly) must have compensation or alimony income. If you don’t have compensation or alimony income you can’t contribute, even if you have other types of income. And if your compensation or alimony income is less than the maximum contribution, the amount you can contribute is reduced.
Source: http://www.definerothira.com

Compensation income. Compensation income includes amounts you receive from your employer of course, but also includes self-employment income from your own business or from a partnership that generates this type of income. There’s a special rule that treats alimony income as compensation income, just for purposes of determining how much you can contribute to an IRA. That means you can contribute to an IRA if you receive taxable alimony payments, even if you don’t work for a living. Compensation income does not include investment income, pension income or non-taxable income.
Spousal Roth IRA. If you file jointly with a spouse who has compensation income, you don’t need compensation income of your own. You can contribute to a Roth IRA based on your spouse’s compensation income.

2. You can contribute to a 401k or a traditional IRA, but not both at the same time. You can however contribute to a 401k, and a ROTH IRA on top of that. So it’s $16,500 tax deferred and $5,000 after tax dollars.

3. The total of your IRAs can only be $5,000 for 2010 if you are under 50 years old. So even though your wife doesn’t have a 401k, she can’t go over the contribution limit.

Hope this helps.

1. between me and my wife, can we put 10,000 (for 2009 yr – I know the deadline was today but I am just asking) in ROTH IRA? Could we open a joint IRA account at lets say Fidelity and have 10,000 deposited or do we have to have separate accounts since one person limit is only 5,000?
2. I have 401K at work and wife does not (she has pension but she won’t qualify for another yr). I know I can put 16500 max (again assuming 2009 limits) in my 401K but I am confused between 401K, traditional and Roth. If I did put 16500 in my employer 401K, can I also put 5000 in traditional IRA and 5000 in Roth IRA? That is total 26500 per person allowed to be deposited in retirement account, correct? I do know that only 21500 is pre tax and 5000 in Roth is after tax.
3. since my wife doesn’t have 401K at work, can she only do traditoinal and Roth totaling 10000? Is there any other way to save more? (I know she has option to get paid on 1099 basis vs W2 fm work – would that be beneficial over getting paid in W2?

Thanks a bunch guys.