| FAQ Keyword |
2005 Tax Year |
Keyword: Deductible Contributions (IRA)
This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Am I considered covered by an employer sponsored retirement plan
for the year if I do not participate in the plan or if I did not work long
enough to be vested?
The answer to this question depends on your type of retirement plan. Generally,
if your employer's plan has a separate account for each employee, it is a
defined contribution plan. If any amount was contributed or allocated by you
or your employer to your account, you are considered covered. It does not
matter if you have worked long enough to be vested.
In the other type of plan, a defined benefit plan, the employer must make
enough contributions (together with earnings) to provide the retirement benefit
promised in the retirement plan. In this type of plan, if you meet the minimum
age and years of service requirements to participate in your employer's plan,
you are considered covered. It does not matter if you are vested.
The Form W-2 (PDF) you receive from your employer
has a box used to indicate whether you were covered for the year. The "Pension
Plan" box should have a mark in it if you were covered.
I want to establish a traditional individual retirement arrangement
(IRA) for my spouse, and I need additional information. What is the most I
can contribute to a spousal IRA during the tax year?
If both you and your spouse work and both have taxable compensation, each
of you can contribute to a separate traditional IRA. The amount that you can
contribute to each IRA is subject to a limit. Refer to chapter 1 of Publication
590 for more information on these limits. Contributions can be made even if
one spouse has little or no compensation, if you file a joint return. You
can make a contribution to a separate IRA for your nonworking spouse if you
file a joint return. Your total contribution to both your IRA and the spousal
IRA for this year is limited by certain factors such as your taxable compensation,
contributions to a traditional or Roth IRA and your age.
For additional information, refer to Tax Topic 451, Individual
Retirement Arrangements (IRAs), or Publication 590, Individual
Retirement Arrangements (IRAs) .
Can I take an IRA deduction for the amount I contributed to a 401(k)
plan last year?
No. A 401(k) plan is not an IRA. However, the amount you contributed is
not included as income in box 1 of your W-2 form so you don't pay tax on it
in the year you make the contribution. For more information, refer to Tax Topic 424, 401(k) Plans, Publication 575, Pension and Annuity
Income, or Publication 560, Retirement Plans for Small Business.
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