401K & IRA

I just switched jobs and this is going to be my first experience with a 401K. The employer will deduct 6.5% of my salary pre-tax and deposit in the 401K. However, the total amount they deduct will be much less than the limit for an IRA deduction, lets say they will deduct over the rest of 2018, $4000.

Can I make a deductible IRA contribution of the DIFFERENCE between the amount my company deducted for the 401K and the IRA contribution limit (I turn 50 in 2018 so its $6500).??
Will that be deductible and not subject to income limits?

What do you suggest that I do so that I take advantage of the full retirement contribution deductibility?



The amount of your 401k deferrals does not affect the limit of your IRA contribution. You can contribute 6500 to either a TIRA or Roth IRA. For a Roth IRA, there are upper income limits and for a TIRA there are limits that apply in determining whether you can deduct that 6500 contribution or not, since for 2018 you are an active participant in the 401k plan. This limit depends on your marital filing status. If you are single the deduction begins phaseout at 63k modified AGI and if a joint filer at 101k joint modified AGI. If you cannot deduct the 6500 IRA contribution, then a Roth contribution is better than a non deductible TIRA contribution.

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