Am I able to qualify for a deductible IRA if the only retirement plan my company offers is a 401K?

Question

My question concerns only a fully deductible IRA, and the confusion over the IRS wording "to quality....you must not be eligible to participate in a company retirement plan". My company does not offer a pension plan , but does offer a 401k plan, so does that disqualify me from a deductible IRA ? Basically the question comes down to the defination of a "company retirement plan".

Answer 1

401k plan is considered a company retirement plan for what you are asking about. Note: actually participating is irrelevent. Your eligibility to participate is what drives this. You still may be able to qualify for it if your spouse (if any) doesn't offer a plan.

Of course this assumes that you are over the income phaseout limits. I assumed you were as you specifically mentioned the wording and didn't ask the typical vague question.

Answer 2

that is a debated question and it relies upon on quite a number of factors. A pension ought to frequently be better effective if their isn't any 401k tournament on the corporation because in the journey that your organization did not provide a 401k then you absolutely ought to nonetheless commence an IRA and performance the finest of both worlds. a pension and an funding plan. Now if there's a corporation tournament reckoning on the dollar volume of the pension an same 401k for a gentle guy with good funds accessible ought to have way better ability to that end should be better effective than a pension. One wonderful element about 401k's is you may retire at fifty 9.5 and withdraw with out penalty it also should be handed down on your little ones upon lack of life and not in any respect purely to major different like a pension. also maximum pensions make you wait till eventually sixty seven to convey jointly the completed benefit in case you retire at sixty 2 you'll in hardship-free words get carry of eighty% of the pension benefit. once you've a serious rate or have the opt to make a serious purchase and position self assurance in a pension in hardship-free words your month-to-month income is fastened with a 401k you ought to easily withdraw the quantity. so as you will see that they both have advantages pensions are gauranteed month-to-month payouts in retirement. 401k's have better ability and larger lenience. yet in reality a pension and a human being retirement account in retirement ought to kick some major a s s now to not indicate maximum individuals could have adequate money to positioned away some p.c. in a 401k it really is all it takes.

Answer 3

You do qualify for an IRA if your company offers a 401(k) plan. You qualify for a regular IRA if your income is less than 75,000 for 2006. You can make a partially deductible contribution if your income is below 85,000. These amounts increase for the 2007 tax year to 83K and 103K.
If you don't qualify for the deductible traditional IRA you may qualify for a non deductible ROTH IRA.

Answer 4

Wow, that must be new because I have a 401K and have been investing in an IRA for years.I will have to look the code up.

Answer 5

It depends on your income.

I believe the deductable IRA starts phasing out at about $50,000 per year.

If you are under this, you should be able to do both.