Starting a Traditional IRA For Tax Deduction

[jmsim9703]

My husband lost his job in 2024 that he had 401k with.  In 2025 he withdrew all of his 401k from the previous employer's plan, so that plan is now at zero dollars. He has a new job with NO 401k. Turbo Tax has brought up that it's not too late (have until 4/15/26) to start a Traditional IRA that could help us deduct $8000 off of the 2025 taxes. However, when going through the prompts it said we didn't qualify because it thinks he has a 401k already because he withdrew from the original, but he does not since his new employer does not offer it and the old one is at zero. What do we do? Thanks!

[Bsch4477]

You are considered covered by a 401 plan if you had it at anytime in 2025 even if you closed it. 

[dmertz]

Distributions from a 401(k) have no bearing on eligibility to deduct a traditional IRA contribution.  He is covered for 2025 only if additions where made for his benefit to an employer plan for the plan tax year ending in 2025.

Is box 13 Retirement plan marked on his 2025 W-2?  If so, he is covered for 2025, perhaps because his current employer provides a pension plan rather than a 401(k).  Does box 12 of his 2025 W-2 have any amounts shown with code D, E, F, G, S, AA, BB or EE?  These codes indicate employee contributions to an employer plan.

Are you covered for 2025?  If so and MAGI is high enough, his traditional IRA contribution is not eligible for a deduction.

[jmsim9703]

His current employer does not offer pension or 401k.  There was no w-2 from the former employer for 2025 since he left in 2024.

I do have 401k of my own, but not sure how it would know since it didn't ask about mine. 

Thanks!