Active participant status on Retroactive pay
I have a client who has been retired for 3 years now and as a result of a settling of a contract has received retro pay. On his w-2, for $2,700, it has the box marked as participating in a retirement plan. Does this mean he is precluded from making a deductible contribution to an IRA even though he wa not employed at all during the year?
Permalink Submitted by Alan Spross on Mon, 2010-02-15 03:16
Having the box checked will only eliminate the deduction if the modified AGI is over a particular minimum limit for the filing status. If the MAGI is under the limit, then the employee can still deduct the TIRA contribution. If married, the other spouse can be affected also.
If the MAGI matters here, the client should check with the employee benefits office to have them verify that the participation is correct. Att’d is a link to the definition of active participant which shows how many factors are considered for various plans. This could well be a defined benefit plan contribution that is the cause of this:
http://www.retirementdictionary.com/definitions/activeparticipant