"A.G. Kalman" <glendale202-mtm[at]yahoo.com> wrote:
- quote -

snip
- quote -

If you will look back you will see I told this to the
original poster already. He didn't seem to get it when all
the details were provided so I tried to "simplify" it for
him.

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Drew Edmundson wrote:
- quote -

To be more accurate: it's not a matter of anyone
contributing. For defined contribution plans, it's whether
the employer allocated or contributed anything to the plan
or whether the employee contributed anything.

For defined benefit plans, it's whether the employee was
"eligible" to participate in the plan for the employer's tax
year. This rule has a trap for many individuals who separate
from an employer on a fiscal year basis. You can wind up
being covered by a plan in two tax years even though you
were not employed by that employer in one of those tax
years.

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Mr Sparkle wrote:
- quote -

Wrong.

- quote -

It's not a matter of whether the deduction can be taken. If
you are an active participant in a plan (this includes both
public and private plans) then your ability to take a
deduction for an IRA contribution depends upon your income.
There are hundreds of thousands (maybe millions) of employs
who are still active participants in defined benefit plans
that have no employee contributions.

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"Mr Sparkle" <dficker[at]earthlink.net> wrote:
- quote -

Not any qualified plans. The test isn't whether she can add
money. The test is "did *anybody* put money into a
qualified retirement plan for her in 2004?" If "yes" then
she is covered by a retirement plan.

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Drew Edmundson wrote:
- quote -

Not exactly sure, I don't have the info in front of me as
ffar as the plan type or balance (balance is not a large
amount-under 5k). She says she cannot contribue to the
company's pension plan, seems similar to the Federal gov't
employee's plan, which I hear they can take the deduction.

Are there certain type plans where the deduction could be
taken?

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MrSparkle wrote:

- quote -

She doesn't have to be making contributions to a plan to be
an active participant. E.g., the company may have a defined
benefit plan that covers her.

--
Alan
http://taxtopics.net

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rSparkle <sparkle[at]marslink.net> wrote:

- quote -

Just because your wife doesn't contribute doesn't mean she
doesn't participate. If the employer contributes to your
wife's benefit then your wife participates. Forfeitures
count as participation also.

What kind of plan does her employer have? Does she have a
balance left over from prior years?

---
Drew Edmundson, CPA (NC)

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Probably a basic question, but I am researching and getting
conflicting statements...I am wondering if my spouse is
"covered by a retirement plan" at work (Box 13 W-2), as it
relates to IRA contribution deduction.

She makes no elective deferrals to the plan, so Box 1 = Box
3 = Box 5 so she does not get the benefit of pre tax
deductions. I am getting advice that she can take the $3k
IRA deduction since she is not participating in the plan, so
she's not covered. Makes sense to me since she is not
getting the pre-tax deduction

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