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I am going to be receiving my monthly pension benefits starting in May 2006 from a qualified retirement plan. Does this mean that I will no longer able to contribute any money to my existing IRA account because I am covered by a Qualified Pension Plan?

You've gotten some wires crossed somewhere. Whether or not you are covered by a retirement plan at work determines whether you are subject to the AGI phaseouts for deducting traditional IRA contributions. Receiving a pension from a former employer does not constitute being covered by a plan.

As for making IRA contributions, you can do so even if you're receiving a pension, but you must have earned income. Pensions are not earned income.

So, assuming you're still working as of now:

2006: You can make an IRA contribution based on your earnings. Deductibility is subject to AGI phaseouts since you have been covered by a plan at some time during the year.

2007: If you have earned income you can make an IRA contribution. If you are not covered by a retirement plan at that job, you can deduct your traditional IRA contribution.

Details are in IRS Publication 590.

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