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posted Apr 1, 2024 11:14:39 AM

IRA Deduction question I was laid off from my main source of income in November 2023. Am I eligible for the full IRA deduction even though my company has 401k?

I was laid off in November 2023.  I also have self-employment income.  Am I eligible for the full IRA contribution deduction.  If so what are the income limits?

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Expert Alumni
Apr 8, 2024 6:07:34 PM

For a traditional deductible IRA you would be subject to the income limits for someone who was covered by a plan at work.  You can find those limits HERE.

You would need to make a deposit into a Traditional IRA account no later than April 15th.  

Depending on the amount of your self-employment income you may also want to consider a SEP-IRA (you can do both!)  

A SEP-IRA allows you to contribute up to 25% of your net profits from self-employment (adjusted for one-half of the self-employment tax).  One of the nicest features of this type of IRA is that as long as you file an extension (Form 4868) you can make your contribution to this type of IRA up until October 15.  

Note that you can file the extension, and then also file the return, and still take your time making that contribution.  You would just have to amend your return if you file it before making the contribution and then fail to do so.