2012 Phase-out for Deductible IRA Contribution
A business owner has a SEP-IRA and an IRA, but is choosing only to fund his IRA for 2012. He has made no contributions to his SEP-IRA for the past 2-3 years. He is over 50, married, filing jointly, and has a 2012 AGI of $111,793. (His wife had a 403b that was rolled over to an IRA last year. No contributions were made into it in 2012.) The question is can he make a fully tax deductible IRA contribution of $6,000 for 2012? My thought is that a SEP-IRA is not considered to be a qualified plan, and the phase out amounts ($92,000-$112,000) don’t apply. I would appreciate your thoughts on this.
Permalink Submitted by Alan - IRA critic on Wed, 2013-03-27 19:14
He is not a current participant in a retirement plan in years he does not make SEP contributions, but he is a participant if he makes a SEP contribution. Therefore, he can deduct his TIRA contribution since the 92-112k phaseount does not apply to him and even if his wife was still a participant, he would be under the higher phaseout for that.