Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 2
posted Mar 20, 2022 1:51:32 PM

Does AGI limit for deducible IRA contributions apply if I was not covered by a retirement plan in 2021?

I retired effective 12/31/2020.  As a retirement incentive, my employer continued to pay my salary through 2021.  But I was not covered by any benefits, including the ability to contribute to a retirement plan, during the year.  (None of the Box 13 items on my W-2 form is not checked.)  My wife also receives social security and is retired, so she is also not covered by a retirement plan during 2021.  I was advised by the company that has my 403b retirement account that since I was not covered by a retirement plan that I could contribute the max of $7,000 (we are both over 50) for each of us into a traditional IRA in 2021 to help with the tax burden for that year.  When TurboTax caught the fact that my AGI was over $125,000, it said my $7,000 IRA contribution would not be deductible.  (My wife's was.)  The help in TurboTax does seem to indicate that the AGI limit on contribution only applies if I am also covered by a retirement plan.  So, my question is whether I can deduct my $7,000 contribution due my not being covered by a retirement plan.

0 2 575
1 Best answer
Expert Alumni
Mar 21, 2022 5:21:52 AM

Yes, if you and your wife were not covered by a retirement plan at work then your deduction of the traditional IRA won't be limited. Please, verify that the box 13 retirement plan isn't checked on your W-2 entry:

  1. Click on "Search" on the top right and type “W-2”
  2. Click on “Jump to W-2”

 

Also, please review your answers during the IRA contribution interview and make sure you answered "No" when TurboTax asks if you have a retirement plan at work:

  1. Click on "Search" on the top right and type “IRA contributions”
  2. Click on “Jump to IRA contributions"

2 Replies
Expert Alumni
Mar 21, 2022 5:21:52 AM

Yes, if you and your wife were not covered by a retirement plan at work then your deduction of the traditional IRA won't be limited. Please, verify that the box 13 retirement plan isn't checked on your W-2 entry:

  1. Click on "Search" on the top right and type “W-2”
  2. Click on “Jump to W-2”

 

Also, please review your answers during the IRA contribution interview and make sure you answered "No" when TurboTax asks if you have a retirement plan at work:

  1. Click on "Search" on the top right and type “IRA contributions”
  2. Click on “Jump to IRA contributions"

Level 2
Mar 21, 2022 9:41:38 AM

Thank you very much.  I was basing my statement that no items in Box 13 were checked on a printed W-2 that I received from my employer.  I imported the W-2 into TurboTax and did not notice that when imported, "ret. plan" in box 13 was checked.  I unchecked it and the problem went away.  I should have  thought to check that myself before contacting you, since I did not actually enter the W-2 into TurboTax.