I have been unable to determine if the IRS would allow me to deduct 100% of an traditional IRA contribution for TY 2017 or rather consider me still a plan participant as an employee of the family business based on a W2 issued for three days of 2016 sick leave that was finally paid to me in early 2017. The box on the W2 is checked indicating that I am a participant in the family company 401K plan.
I have consulted the third party administrator for the 401K plan that we enjoyed in the family business, the IRS website and accountants to determine if I am still considered a plan participant in the 401K. To further muddy the water he 1) never properly terminated my employment 2) reported to the plan administrator that I had zero income from the company in 2017 and the administrator assigned an arbitrary termination date of 7/1/2017 but upon further communication suggest that date is open to change ie 1/1/2017. As I set up the plan, I know that it stipulates that one must be employed on the last day of the year to participate in profit sharing.

I am legally separated and filing my own tax return as the divorce is not finalized. We have not lived together for the year of 2017. At age 60 I have only a few more years to contribute to my retirement and that is the reason for me pursuing a 2017 contribution to an IRA. My reportable income for 2017 TX consists of temporary spousal support of $105,214 and the meager $640.24 California three days of required sick leave reported on the W-2. My accountants solution was to simply “uncheck the box” posts of the electronic return and see how it goes; argue with the IRS later. Maybe the $6,500 IRA contribution is not worth the trouble and cost of defense with the IRS. Do I qualify to contribute to a Roth IRA instead?

I would welcome any help in clarifying my situation as tax and IRA deadlines are fast approaching.

Susan