Do I qualify for the IRA deduction if I had the option of a workplace 401K plan but did not participate in it?

I thought I could make a $6000 contribution and benefit from the tax deduction. TurboTax is trying to tell me otherwise. There was an anomolous event which could have affected this. My employer 'accidentally' made a deduction for my 401k (which existed from a previous contract with this employer). This error was 'fixed' in the form a check sent to me by Fidelity. Could this be causing the issue, or could other factors be at play?

470

Expert Alumni

Mar 27, 2020 12:07:08 PM

If you are eligible to participate to the 401(k) at plan but chose not to contribute to it, you are still considered as being covered by a retirement at work and box 13 on your form W-2 is checked.

As a consequence, the deduction of an IRA contribution may be reduced or eliminated depending on your MAGI.

Please read this IRS document for more information.

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Do I qualify for the IRA deduction if I had the option of a workplace 401K plan but did not participate in it?