No. of Recommendations: 0
I've done more reading on the subject, but I'm still somewhat confused about whether or not I could deduct an IRA contribution. I'm working part time now and am not receiving any benefits. My husband contributes to a 401k at work. This is what I found in the IRS publication:

"If your spouse is covered. If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table B next.

Table B If your filing status is: Your IRA deduction is reduced if your modified AGI is between:
Married--joint return $150,000 and $160,000 $160,000 or more"


Our modified AGI was 70k last year. To make matters more complicated, I will begin a part time job with a school district in August. I will pay into the teacher retirement system at that time. Does that make my IRA contributions non-deductible? Can I deduct some because I wasn't covered prior to August?

I would welcome any help or sources in finding answers to these questions.

Thanks!
Print the post Back To Top
No. of Recommendations: 4
tlcdgc writes...

>>I've done more reading on the subject, but I'm still somewhat confused about whether or not I could deduct an IRA contribution. I'm working part time now and am not receiving any benefits. My husband contributes to a 401k at work. . .Our modified AGI was 70k last year. <<

You were wise to review IRS Pub. 590. It makes for a good read when warm milk wont do the job.

Anyway, your husband is not eligible to make a deductible IRA contribution because he is covered by a 401(k) and your AGI exceeds $62,000.

You,on the other hand, can take a full deduction becuase you are not covered by a qualified plan and your AGI is less than $150,000.

I am assuming you file joint returns. If you file separately, then forget everything I just said because you are not eligible for a deductible IRA contribution.

>>To make matters more complicated, I will begin a part time job with a school district in August. I will pay into the teacher retirement system at that time. Does that make my IRA contributions non-deductible? Can I deduct some because I wasn't covered prior to August?<<

If you are covered by a qualified plan at any time during the year, you must follow the applicable rules. Since the school system's plan meets the definition of a qualified plan, you will not be eligible for a deductible IRA if your AGI exceeds $62,000.

As for the time prior to August, that is not helpful. IRA contributions are based on the calendar year. As such, you could go to work on December 30th and if you participated in a qualified plan, you would be subject to the stricter contribution rules.

Don't blame me, I didn't write this mess.

Good luck to you.

MDGrabhorn, CFP



Print the post Back To Top
No. of Recommendations: 0
MDGrabhorn,

That was the interpretation I made also. I was just hoping I was missing something. Thank you so much for your detailed reply! The IRS has such a way with words, and in fact, I did go to sleep right after reading the publication. ;) There was one year that I would have been eligible. Guess I missed out on that one!

tlcdgc
Print the post Back To Top