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Author: wrndln Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75809  
Subject: Deductable IRA question Date: 3/26/1998 9:55 PM
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I have a question regarding whether or not I can open an IRA for my wife that is deductable. My wife lost her job last December, however she did not have her termination interview until Jan 15, 1998. At that time she got her accrued vacation pay which had 401k money taken out. She also has a retirement plan which will be paid as a lump sum April 1, 1998. I have a 401k and a pension plan where I work and I exceed the income limit for having a deductable IRA. I would like to know if my wife can open a deductable IRA for 1998.

Thanks
Rusty Nelson
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2419 of 75809
Subject: Re: Deductable IRA question Date: 3/27/1998 8:43 AM
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Greetings, wrndln aka Rusty Nelson, and welcome.

<<I have a question regarding whether or not I can open an IRA for my wife that is deductable. My wife lost her job last December, however she did not have her termination interview until Jan 15, 1998. At that time she got her accrued vacation pay which had 401k money taken out. She also has a retirement plan which will be paid as a lump sum April 1, 1998. I have a 401k and a pension plan where I work and I exceed the income limit for having a deductable IRA. I would like to know if my wife can open a deductable IRA for 1998.>>

The answer to this question will hinge on when your wife was no longer considered a participant in the 401k or the pension plan. If she participated just one day in 1998, then she is considered a participant for the entire year. The deductibility of her IRA contribution for 1998 would depend on your joint AGI. In 1998, if you're covered by an employer's plan, IRA deductions phase out for a joint AGI between $50K and $60K.

OTOH, if her last day of participation was in 1997, then her entire 1998 IRA contribution of $2K will be deductible regardless of your coverage at work. That's a new change passed as part of the Taxpayer Relief Act of 1997.

Bottom line: She needs to have her old employer provide her the exact date of her final participation in the 401k and her other retirement plan.

Regards…..Pixy


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