I dont contribute to a 401K at work but my employer set up a 401K PSP and deposited $101.00 dollars of his money in it. Am I now considered as having a 401K at work?

All of the money is from the employer and I have always declined to participate in a 401K. It is listed as a qualified non elective contribution and my plan status is non contributing. I am concerned that if this means I have a 401K at work my MAGI is too high to deduct my IRA contributions.

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1 Best answer

Level 15

Jun 4, 2019 1:03:34 PM

Yes, you are considered part of a plan at work.

"You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;"

Source: https://www.irs.gov/retirement-plans/are-you-covered-by-an-employers-retirement-plan

Level 15

Jun 4, 2019 1:03:34 PM

Yes, you are considered part of a plan at work.

"You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;"

Source: https://www.irs.gov/retirement-plans/are-you-covered-by-an-employers-retirement-plan

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I dont contribute to a 401K at work but my employer set up a 401K PSP and deposited $101.00 dollars of his money in it. Am I now considered as having a 401K at work?