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New Member
posted Feb 25, 2021 11:45:45 AM

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?

0 2 293
2 Replies
Expert Alumni
Feb 25, 2021 12:00:48 PM

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. 

Level 15
Feb 25, 2021 12:03:06 PM

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-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work