IRA contribution

Submitted by Nancy Maugel on Tue, 2014-08-12 16:22

I have a client, who is covered by an employer 401K Plan, but because of income earned in 2013 has been told he is not eligible to participate in plan in 2014 (he is not an owner in the company) Will he be able to make a pre-tax IRA contribution for 2014 since he is not able to participate in his employer plan?



Submitted by Alan - IRA critic on Tue, 2014-08-12 16:44

High income employees can usually participate to at least a limited degree. It is not possible to say if he is considered a participant (coverage box checked on W-2 for 2014), only the plan administrator will know for sure.

401(k), 403(b), Salary deferral SEP, SIMPLE IRA

The individual is an active participant if the individual elects to defer compensation (make salary deferral contributions) to the to a plan If the individual is eligible to make salary deferral contributions, but declines to make such salary deferral contributions for a year, and no other contributions or forfeitures are allocated to such individual’s account for the plan year ending with or within the individual’s taxable year, the individual is not an active participant for that year.

Submitted by Nancy Maugel on Tue, 2014-08-12 17:51

Yes I questioned him re not being able to participate at all and that is what employer is telling him.

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