Comments on: 2009 Traditional and Roth IRA Contribution Limits

By: Ryan

Ryan — Sat, 13 Mar 2010 15:05:37 +0000

Hello Marianne, yes, you are still considered covered by an employer sponsored retirement plan. I’d take a look at opening a Roth IRA if you are eligible to contribute to a Roth.

By: marianne

marianne — Sat, 13 Mar 2010 13:19:01 +0000

If you lost your job and only were covered by an employer plan for three months of the year. Are you still considered covered under an employer plan for that year? Looking to make a traditional ira contribution and can only deduct if considered not covered but not sure what the rules are since I was covered for a small part of the year?

By: Ryan

Ryan — Wed, 10 Mar 2010 15:02:48 +0000

Jim, Based on my understanding, income earned within a Traditional IRA is not taxed until it is withdrawn and income earned within a Roth IRA is not taxed at all (provided you make qualified withdrawals). But taxation is only one part of the equation, and I am not sure what the reporting requirements are regarding the partnership. You may be required to report the earnings on the K-1 simply for tracking purposes, but I am not certain. I recommend speaking with an accountant or tax professional regarding this scenario.

By: Jim Bogue

Jim Bogue — Wed, 10 Mar 2010 14:54:53 +0000

I have an IRA that is a partnership. I received a K-1. My question to you, as this partnership is in an IRA is it necessary to file and to report the income from the investment?

By: Ryan

Ryan — Thu, 04 Mar 2010 02:22:21 +0000

Rick, people are eligible to contribute to both an IRA and a 401k if their income limits allow for contributions. You can read more about owning multiple retirement accounts in this article: How Many Retirement Accounts Can You Have?.

The only thing I can think of that you might be running into is Traditional IRA deductibility eligibility based on your Adjusted Gross Income (AGI). If you do not have an employee sponsored plan you can contribute to a deductible IRA regardless of your AGI. If you had access to an employee sponsored retirement plan, then the AGI limits for deductible Traditional IRAs will apply.

Because you had access to an employee sponsored 401k plan for part of the year, the AGI limits will apply to you. Your best bet is to first determine your AGI, then contribute to a deductible IRA or Roth IRA if you are eligible, then consider a non-deductible IRA if you AGI is too high for the other options.

By: Rick

Rick — Thu, 04 Mar 2010 01:29:14 +0000

I haven’t found anything related to my inquiry so I am posting a question regarding 401k eligibility and IRA contributions. I contributed to an employer 401k via payroll deposits. Since I was terminated from my job in early 2009, I did not contribute the max amount allowed. I was hoping to contribute to an IRA for 2009 prior to filing taxes but I am understanding that I am not eligible. Can this be correct if I was not able to contribute to the 401k after job termination ?

Any help appreciated.

Rick

By: Ryan

Ryan — Wed, 24 Feb 2010 13:45:41 +0000

Dean, great question. I did a little research this morning, and based on the info I found, he can probably contribute the full amount since $3,500 would fall under the standard deduction tax limits. I have heard similar questions regarding parents reimbursing their children for IRA contributions or other investments, which should be fine, as long as you fall under the gift tax limit ($13,000 annually per person). That said, I am not 100% certain on this information; that is just my interpretation based on a few articles I read. I recommend speaking with a tax pro before making final contributions and/or gifts.

Best of luck, and great job getting your son started early with his investing!

By: Dean Boyd

Dean Boyd — Wed, 24 Feb 2010 09:56:10 +0000

My 16 year old son has income for 2009 approximately $ 3500.00. How much $$ can he contribute to a Roth IRA and could I re-imburse him w/ a cash gift without incurring taxes for myself and/or son?