I had four direct rollovers and one indirect rollover to my personal IRA this year. Can I still add up to $7000 to my personal IRA and deduct that amount? I’m 50+

[april15comingsoo]

*The direct rollovers were from past jobs  in prior years. 
*The TurboTax form would not let me add this deduction.

[DanaB27]

It depends, the deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.  Please see IRA deduction limits details.

For 2023 the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

• $6,500 ($7,500 if you're age 50 or older), or
• If less, your taxable compensation for the year

Please see Where do I enter an IRA rollover?

[april15comingsoo]

I am married filing jointly. Our AGI is under $218k. My spouse has a 401(k) retirement plan at work to which he contributed about 6k this year. I worked about 8 months with a company and contributed about 2k to that retirement plan, which I then rolled over to my personal IRA. Can he or I contribute anything into a personal IRA and deduct it? 

[DanaB27]

You both were covered by a retirement in 2023 and therefore the 2023 IRA Deduction Limits - Effect of Modified AGI on Deduction if You Are Covered by a Retirement P... apply. Therefore, if your MAG was more $136,000 then you will not be able to deduct the traditional IRA contribution but you still can make nondeductible traditional IRA contributions.

[Opus 17]

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@april15comingsoo wrote:

I am married filing jointly. Our AGI is under $218k. My spouse has a 401(k) retirement plan at work to which he contributed about 6k this year. I worked about 8 months with a company and contributed about 2k to that retirement plan, which I then rolled over to my personal IRA. Can he or I contribute anything into a personal IRA and deduct it? 

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There are two things happening.

It sounds to me that in Turbotax, you might have entered the rollovers in the contribution section?  A rollover is not a contribution, and rollovers are only entered from the 1099-R.  If you entered the rollovers as if they were contributions, you could get a warning about exceeding the contribution limit.

Then, legally speaking, because a rollover is not a contribution, it does not affect your ability to make a contribution.  So your contributions are controlled by the normal rules, ignoring the rollovers.  

You can always contribute up to $6500 (or $7500 if over age 50) to a traditional IRA, and your spouse can contribute the same.  However, you can't deduct the contribution if you are over the income limits shown here.

https://www.irs.gov/retirement-plans/ira-deduction-limits

You may also be able to contribute to a Roth IRA, depending on your income and filing status.  

If you make a non-deductible contribution to a traditional IRA, you must keep track of the non-deductible basis on form 8606 (Turbotax will do this for you), so that when you make withdrawals in retirement, the portion of the account that came from non-deductible contributions will be tax exempt since it was already taxed.  We can also discuss the concept of a "backdoor Roth" depending on your circumstances.  

[april15comingsoo]

Thanks for the replies. Sounds like I would have been better off not participating in my  — very temporary — company’s retirement plan. There was no match. It’s one of those situations where you’re basically a contractor but they pay you on a W2. Is the key to being able to consider a higher income level for deductibility whether a plan is simply offered, or if you participate in it? 

[Opus 17]

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@april15comingsoo wrote:

Thanks for the replies. Sounds like I would have been better off not participating in my  — very temporary — company’s retirement plan. There was no match. It’s one of those situations where you’re basically a contractor but they pay you on a W2. Is the key to being able to consider a higher income level for deductibility whether a plan is simply offered, or if you participate in it? 

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The limits for deducting  contributions to a traditional IRA depend on your income, your filing status, and whether or not you "participate" in a workplace retirement plan.  There is a chart here.

https://www.irs.gov/retirement-plans/ira-deduction-limits

Unfortunately, you are considered for income taxes to "participate" if you were enrolled even for a very short time and even if there was no match.