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Company Sponsored 401K and Loss of Emplpyment

Hello,

I was participating in a company sponsored 401K but lost my job in March so only contributed a small amount.  Can I add funds to an individual IRA to reduce taxable income?

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2 Replies
MinhT1
Employee Tax Expert

Company Sponsored 401K and Loss of Emplpyment

You are considered as covered by a retirement plan by work, even if you only worked there part of the year. Your 2020 form W-2 should have a check mark in box 13 - Retirement plan.

 

As a covered individual, your eligibility to contribute to a Traditional IRA depends on your filing status and your Modified Adjusted Gross Income (MAGI).

 

You can check your eligibility by reading this IRS document

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dmertz
Level 15

Company Sponsored 401K and Loss of Emplpyment

Because you were an active participant in a workplace retirement plan in 2020, whether or not you are eligible to deduct a traditional IRA contribution depends on your filing status and modified AGI for the purpose of an IRA deduction:

 

https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-l...

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