Traditional Deductible IRA

Submitted by Anthony Zalesky on Mon, 2016-11-21 21:26

married filing jointly with a spouse who is covered by a plan at work
$184,000 or less a full deduction up to the amount of your contribution limit.
more than $184,000 but less than $194,000 a partial deduction.
$194,000 or more no deduction.
Above are the deduction limits for 2016 when one spouse is covered by a retirement plan at work. If one spouse is a union tradesman and will receive a pension from the union upon retiring. Is this pension considered a plan at work?



Submitted by Alan - IRA critic on Mon, 2016-11-21 21:53

Yes. A union plan is typically a defined benefit plan. Active participation exists during employment but not after retirement even if benefits are being paid. The union employee’s W-2 would typically have the retirement plan box checked if they participant for even one day a year. The following is the definition of an active participant for DB plans:

Defined Benefit Plan

The  individual is an active participant if he/she  is not excluded under the eligibility provisions of the plan for the plan year ending with or within the individual’s taxable year ,regardless of whether the individual has elected to decline participation in the plan, has failed to make a mandatory contribution specified under the plan or has failed to perform the minimum service required to accrue a benefit under the plan.

 

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