"Covered by Retirement Plan"

[rjg7]

My wife worked a few days in 2022 at her former employer (who offers a retirement plan) and was issued a W2 for that short time. Following that, she worked as a consultant the rest of the year and was issued a 1099-NEC. 

Because she was working as a consultant, her retirement contributions were placed in her IRA as she was not eligible the vast majority of the year for a 401K. Despite this, TurboTax is saying she was eligible for a retirement plan at an employer, which results in her no longer getting a deduction as her (our) income rises far above the phase out limit when she is supposedly eligible for a retirement account at an employer.

My question therefore is, is there a total time you need to work for an employer to actually be "eligible for a retirement plan at an employer"? 

[AnnetteB6 · Accepted solution]

Unfortunately, even working for an employer for one day where you are 'covered by a retirement plan at work' is long enough to be considered to have been covered for the whole year with regard to the rules that apply to IRA contributions. 

There is no option to pro-rate the time for only part of the year.  It's just a covered or not covered situation.  

[rjg7]

Thank you for the response.