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dschuler66
New Member

I was covered by a work retirement plan for a couple of months in 2016 and our income was above $118k. Can I make a contribution to a personal IRA for a deduction?

 
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PaulaM
Expert Alumni

I was covered by a work retirement plan for a couple of months in 2016 and our income was above $118k. Can I make a contribution to a personal IRA for a deduction?

If you or your spouse were covered by a retirement plan in 2016 (even if for one day), and made more than the limit, you won't be able to contribute to a deductible IRA.

You can still contribute to a non-deductible IRA, then convert to a Roth IRA (back-door Roth). 

Nondeductible IRAs are available to anyone with earned income regardless of how much they make, although few people use them since they don't offer any upfront tax benefit.

This will give you tax-deferred growth in the nondeductible IRA, and if you convert to a Roth IRA, tax-free treatment later.

https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-l...

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PaulaM
Expert Alumni

I was covered by a work retirement plan for a couple of months in 2016 and our income was above $118k. Can I make a contribution to a personal IRA for a deduction?

If you or your spouse were covered by a retirement plan in 2016 (even if for one day), and made more than the limit, you won't be able to contribute to a deductible IRA.

You can still contribute to a non-deductible IRA, then convert to a Roth IRA (back-door Roth). 

Nondeductible IRAs are available to anyone with earned income regardless of how much they make, although few people use them since they don't offer any upfront tax benefit.

This will give you tax-deferred growth in the nondeductible IRA, and if you convert to a Roth IRA, tax-free treatment later.

https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-l...

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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