IRA eligibility

[savagliof515]

I retired at age 60 in 2018. In 2019, I collected income from nonqualified deferred compensation, exercising of nonstatutory stock options, and consulting fees. I can't contribute to a retirement plan at my former employer, but Box 13 on the W2 for the stock options is checked under Retirement plan because I am covered by the employer's pension plan that will start when I am 65. I want to contribute to a Traditional IRA. Are there any income limitations due to Box 13 being checked preventing deductibility?

[DianeC958]

Yes,  there are limitations for you to be able to contribute to an IRA plan.  They are many factors that are a part of deciding how much you contribute to an IRA plan be deductible.

If you put your information into TurboTax it will tell you the amount you can contribute and deduct.  

You do not want to over contribute because there is a 6% on overcontributions that are not withdrawn.

IRA Limits

• 2019 Individual Contribution Limit
• Traditional and Roth IRAs Under age 50 $6,000
• Age 50 or older $7,000

Traditional IRA Phaseouts

Taxpayer is covered by an employer retirement plan:

• MFJ $103,000 to $123,000
• Single, Head of Household $64,000 to $74,000
• MFS  $0 to $10,000

Link to IRA Deduction Limits

[savagliof515]

So for clarification, if I am no longer an employee, then I don't have a retirement plan AT WORK. But because the company checked Box 13, it appears that this makes me ineligible to make a deductible contribution to a Traditional IRA, correct?  In future years when I have no ordinary income from the exercising of stock options, I assume they will not send a W2 with just Box 13 checked and no income. I will still have consulting income. Without a W2, would this change my eligibility for a deductible contribution, as long as consulting income is below the threshold levels?  Keep in mind that I will begin receiving pension payouts in a few years, but these will not be on a W2. Any light you could shed on this would be much appreciated.

[LindaB1993]

You are correct.  Once the deferred compensation is no longer generated,  box 13 as a retirement account participant  is no longer relevant.  

Your eligibility for deductible contributions to a traditional IRA will then be limited by income thresholds.