IRA contributions and deductibility
Situation: Client has $264k of adjusted gross income and was eligible to make a retirement plan contribution (Box 13 of w-2 was checked) in 2017. He terminated employment in 2017 and all of the contributions he did make were returned to him in 2017 and he was issued a 1099-R. Can he make a deductible IRA contribution for 2017? His wife has no income. Can she make a deductible contribution?
Permalink Submitted by Alan - IRA critic on Tue, 2018-02-20 23:44
No. He is still considered an active participant for 2017 even though he later withdrew the contributions.Wife also cannot deduct a spousal contribution due to their joint modified AGI. Also too high for a Roth contribution.