401(k) & IRA deduction
The client changed employment effective 1/1/2017. They went from being a sole proprietor to an employee. They will not be covered by their employer’s plan in 2017. They will not contribute to their 401(k) for 2017. They made a profit sharing contribution to their solo 401(k) in 2017 for 2016. The plan is still open in case they may return to self-employed income in future years.
Under the above scenario I believe that they can make a deductible IRA contribution for 2017?
Many thanks as always …. Mary
Permalink Submitted by Alan - IRA critic on Mon, 2017-04-03 00:44
Yes, they can take the IRA deduction unless their W-2 indicates client is a retirement plan participant due to either coverage by a DB plan if employer has one, or if their 401k receives a profit sharing contribution for 2017 even though client did not contribute. The plan document could be checked now to see if that is possible.