IRA in lieu of 401k participation
What IRA contribution rules would an individual fall under if they have access to a 401k, but prefer IRA instead? The issue is that she can contribute more to the IRA than the 401k and would prefer to maximize retirement savings (assuming it would be deductible). They have a joint income of 160k or so. Her income is only about 5k.
Thanks,
Mike
Permalink Submitted by Alan - IRA critic on Thu, 2016-01-07 00:03
Usually, if she declines to participate in the 401k, she is not considered a participant unless a 401k is set up for everyone and gets a profit sharing contribution even if she does not contribute. She would also be a participant if she qualifies for a defined benefit pension, and her W-2 would indicate participation. Assuming she is not a participant, she can deduct her TIRA contribution. See definition of active participant here: http://retirementdictionary.com/definitions/activeparticipant