Author Topic: pre-tax 401k and pre-tax IRA contributions in the same tax year I retired?  (Read 128 times)

financiallypossible

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The scenario:

I just retired and contributed 15528 to my 401k for 2017. I now no longer have access to an employer sponsored retirement plan and I have NO intention of doing so for the remainder of the year (or in any future year for that matter).

My wife retired in early March 2017 and contributed roughly 12k to her employer sponsored retirement plan during the first 2 months and few days.

Can we each contribute 5500 to a traditional (pre-tax) IRA for tax year 2017?

Please keep in mind we no longer have access to employer sponsored retirement plans yet still have enough earned income during the earlier part of the year to substantiate such contributions. Furthermore, I have already maxed my Roth IRA (5500) for the year many months ago but my wife has not contributed to hers at all for tax year 2017.

The finance articles from Forbes, Personal Capital, TurboTax, and others do a very poor job of answering my question. This is a special case scenario to the early retirement community and personal finance media does not cater to our community.

I'd greatly appreciate anyone that can point me to parts of the IRS code / provisions that clarify my situation.

I am currently trying to get my employer to alter my final paycheck to put a large chunk of that paycheck into pre-tax contribution to bring me to or very near the 18k limit. I am not meeting with much success. I contacted the 401k provider as well to investigate other avenues to bring me up to the 18k limit for the 401k. That did not meet with success either.
« Last Edit: September 11, 2017, 11:01:02 AM by financiallypossible »
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seattlecyclone

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Re: pre-tax 401k and pre-tax IRA contributions in the same tax year I retired?
« Reply #1 on: September 11, 2017, 12:31:31 PM »
There are different income limits for pre-tax IRA contributions depending on whether or not you are covered by an employer retirement plan. Based on the information you provided, you and your wife both worked for part of 2017, during which time you had access to employer retirement plans and contributed a sizable amount to them.

Therefore the lower income limits for deductible IRA contributions will apply to you: if your AGI is under $99k, you can deduct the full $5,500 amount. Up to $119k you can deduct less than $5,500. Above $119k you can't deduct any of it.
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The Roth IRA was named after William Roth, who represented Delaware in the US senate from 1971-2001. "Roth" is a name, not an acronym. There's no need to capitalize the final three letters.