IRA deductions

[sjletai]

i worked through mid-year 2019 receiving a salary, and then retired and began receiving an annuity from my retirement plan.  i would like to deduct IRA contributions of $14k for MFJ filing, but Turbotax is telling me my MAGI is too high, but i don't think that should be applicable since i worked half the year.  do you agree?

[macuser_22]

No I don't agree.

If you were covered by a retirement plan at work at any time in 2019 (even one day) then the MAGI limit is for the entire year.

Covered by a retirement plan at work is usually indicated by box 13 on your W-2.

TurboTax makes that determination if any of the following are true:

1) Box 13 (retirement plan) on your (or spouses) W-2 is checked,
2) Box 12 on your (or spouses) W-2 contains codes D, E, F, S, or AA/
3) You answered “yes” to the “Are you covered by a Retirement Plan at work” in the interview.
4) You have a self-employed retirement plan.The maximum IRA contributions for 2019 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.

The maximum IRA contributions for 2019 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355

See this IRS link for Traditional IRA deduction limits when covered by a retirement plan at work.

https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits

[sjletai]

scratch that question

[sjletai]

thanks for the quick and excellent feedback, though not what i was hoping to hear 🙂

[macuser_22]

In fact some people find that they are even covered in the next year because the employers retirement plan year does not have to be a calendar year or the employer for whatever reason makes an employer contribution to the 401(k) in the next year and issued a W-2 for it.