I was laid off from my previous long-time employer at the end of July 2021. My contributions to that company's sponsored 401-K program was just under $5500. I rolled over my 401-K account to a traditional IRA in August 2021, and was unemployed the remainder of 2021. I have two questions:Am I eligible to make a tax-deductible 2021 contribution to my IRA before the April 18, 2022 deadline?If so, is that IRA contribution limited by my 401-K contribution, or can I contribute and deduct up to $7000?Thanks for your assistance!

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MAH1970

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Traditional IRA Contribution Possible?

Forum|Forum|4 years ago
April 11, 2022
1 reply
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I was laid off from my previous long-time employer at the end of July 2021. My contributions to that company's sponsored 401-K program was just under $5500. I rolled over my 401-K account to a traditional IRA in August 2021, and was unemployed the remainder of 2021. I have two questions:

Am I eligible to make a tax-deductible 2021 contribution to my IRA before the April 18, 2022 deadline?
If so, is that IRA contribution limited by my 401-K contribution, or can I contribute and deduct up to $7000?

Thanks for your assistance!

Best answer by AnnetteB6

Because you were covered under a retirement plan at work for at least part of the year, you are considered to have been covered for the entire year. This means that the lower income limits will be in place to determine whether you can make a deductible Traditional IRA contribution.

When you enter information into TurboTax regarding a Traditional IRA contribution, the program will determine what amount, if any, will be deductible. You may still make a contribution before the due date of the return, even if it is not deductible or only partially deductible. The total amount you can contribute is not limited by your 401(k) contribution. You may still contribute up to $6000 (or $7000 if over the age of 50).

Take a look at the following TurboTax help article to see the income limits associated with being able to deduct your Traditional IRA contribution: