ACA IRA deduction if you don't have retirement account through your job

[user17664993119]

Hey all,

I'm retiring 12/30 so the last paycheck I receive will be in January and it will have a 401k contribution on it. GetCoveredNJ's FAQ says "IRA deduction for contributions if you don’t have a retirement account through your job". I won't have a job in 2026 but I will receive that paycheck. Also, I will receive a separate check for my vacation payout later in January and a bonus check later in the year (yes, they pay you your bonus from 2025 in 2026 even after you leave the company) but neither of those checks will have a 401k contribution on them. I'm assuming this 1 check with a 401k contribution in January will mean that I'm considered to have a retirement account through my job for 2026 which means I cannot deduct my 2026 IRA contribution and lower my ACA MAGI, correct? Thanks so much!

[AmeliesUncle]

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@user17664993119 wrote:

will mean that I'm considered to have a retirement account through my job for 2026 which means I cannot deduct my 2026 IRA contribution

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Yes, it will mean you are covered by an employer retirement account, but whether or not you can deduct a Traditional IRA contribution is based on your income (see link; it shows the 2024 income limits but should give you an idea for how much income is allowed).

https://www.irs.gov/retirement-plans/plan-participant-employee/2024-ira-contribution-and-deduction-l...

[user17664993119]

Thanks for the reply! I thought if you have a retirement plan at your job the income limits applied to IRA deductions for the income tax MAGI calculation not for the premium tax credit MAGI calculation? It applies to both?

[AmeliesUncle]

If your total income is below those amounts in the link (and slightly increased due to 2026 amount), a Traditional IRA contribution is deductible.

A deductible Traditional IRA will lower your MAGI for purposes of the Premium Tax Credit.