IRA Contribution with Employer Plan available
My employer offers a 401K plan that I do not participate in. My wife’s employer does not offer a plan. My employer’s W2 had box 13 checked stating that a plan was offered.
I am using TurboTax to calculate my 2010 return. It would not let me (although it did let my wife) contribute to my IRA, because my AGI was too high. It is my understanding that if both of us do not participate in our employer’s plans that we are eligible to make maximum IRA contributions (which would be $6K in my case and $5K in my wife’s). Am I correct in this analsyis? If so, I need to talk to TurboTax about how to get this working in their program.
Permalink Submitted by mk foss on Wed, 2011-03-02 19:35
Not participating in a employers 401k does not make you eligible for an IRA contribution. If you are eligible and do not defer into the plan, you’re treated as participating with a zero deferral percentage. Since you’re covered by a plan for tax purposes, you cannot deduct an IRA contribution. When one spouse is covered and the other is not, there is a calculation which has allowed your wife’s contribution but yours is not deductible.