Last year, I worked for 2 employers. I had a 401k Plan with the first employer My question is would I get a tax deductible for the amount I invest in Individual IRA.

[diliprnair1985]

For the last year, I worked for 2 employers. I had a 401k Plan with the first employer but I didnt opt for a 401K plan for the second employer. I am trying to reduce the federal tax I am supposed to pay by planning to invest in a Individual IRA. My Salary along with my wife is higher that 150K and we are filing under married filing Jointly status. My question is would I get a tax deductible for the amount I invest in Individual IRA. Since I had a 401k plan for some time with one employer am I eligible for a deductible.Also my w-2 for the first employer has a "X" mark on the retirement. I have invested less than $300 overall in my employers 401k plan. My wife has not participated in employer 401k, so she is eligible for get up to 5500. Would I be eligible as well for tax deductible or since I had employer plan for 2 months IRS would consider me uneligible.

[ChristinaS · Accepted solution]

No, you would not. Since you had a retirement plan during the year, you can only receive a full deduction if your Modified Adjusted Gross Income is under $98,000 (Married Filing Jointly). You can get a reduced deduction between $98,000 and <$118,000. You get no deduction for your own contribution if MAGI is at or above $118,000.

If you had any retirement plan eligibility during the year, you are considered to have been covered for the whole year for this purpose. A mere checkbox on any W2 makes or breaks an entire year. You don't have to have been at the job all year, and you don't have to have contributed either.

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

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

For your wife:

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