Author Topic: Job change this year - Retirement savings opportunities?  (Read 1436 times)

xzonnia

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Job change this year - Retirement savings opportunities?
« on: November 06, 2016, 11:59:41 AM »
In 2015, my husband and I both fully funded our traditional 401Ks and Roth IRAs. In March of this year, he left his job for one that does not offer any type of retirement plan. According to the IRS documents I've seen, this qualifies him to be able to invest in and deduct a traditional IRA, assuming we don't end up exceeding the income limits.

What I don't know about is the timing - since he contributed to his 401K for 3 months before changing jobs. Is he still eligible to contribute to a traditional IRA, or will that not apply until 2017?

MidWestLove

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Re: Job change this year - Retirement savings opportunities?
« Reply #1 on: November 06, 2016, 01:07:59 PM »
I think you may be mixing up ability to contribute vs ability to get tax deduction for that contribution.
You are always eligible to contribute to traditional IRA, there are no income limits to being able to contribute. Total amount you can contribute per year is fixed.
Your tax benefit phases out at specific ranges if you did had access to retirement plan and at higher ranges if you did not had access to retirement plan.

here are few links
https://www.irs.gov/retirement-plans/ira-deduction-limits
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
https://www.irs.gov/retirement-plans/are-you-covered-by-an-employers-retirement-plan

I do not know if anyone asked IRS what specifically 'covered' means if persons situation have changed during the year (job change , unemployment, etc)  - covered at any time during that calendar year (i.e. being fired Jan 16 2016 and having one contribution to 401k is considered covered), covered as of 12/31, or some other definition.


xzonnia

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Re: Job change this year - Retirement savings opportunities?
« Reply #2 on: November 06, 2016, 06:14:11 PM »
You're right. I meant to be asking about qualifying for the deduction, not ability to contribute.

Thanks for the links!

catccc

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Re: Job change this year - Retirement savings opportunities?
« Reply #3 on: November 07, 2016, 10:06:10 AM »
If your MAGI is under the limit, you may be able to deduct a traditional IRA contributions even if you both have workplace retirement plans!  DH and I both deducted traditional IRA contributions.  He doesn't have a workplace retirement plan, but I do.  It was a little tricky to find the limits for this combination of factors, but it is out there:

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work
« Last Edit: November 07, 2016, 10:12:29 AM by catccc »