The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/if-nothing-is-contributed-to-your-employer-30531715.aspx

Subject:  Re: 401k , IRA, ROTH..can I hv all 3? Date:  2/8/2013  10:32 AM
Author:  aj485 Number:  71358 of 75381

If nothing is contributed to your employer sponsored retirement plan for you in a given year, then you will not be an 'active participant', thus you can deduct your contribution to your traditional IRA regardless of your Adjusted Gross Income.

Sorry. This is not correct. When it comes to IRA deductibility, there is nothing in the rules about being an 'active participant' in a retirement plan - the rules are based on whether you are 'covered' by a retirement plan. And it only takes one day of being covered to limit your deductibility for the entire year. From IRS Pub 590 http://www.irs.gov/pub/irs-pdf/p590.pdf

Limit if Covered by Employer Plan

As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Your deduction is also affected by how much income you had and by your filing status. Your deduction may also be affected by social security benefits you received.

Reduced or no deduction. If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status.


AJ
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us