IRA deduction - please help me figure out

Jan 11, 2007 3 Replies

Both my husband and I were eligible to participate in the



401(k) in 2006, however none of us participated. Can we still fully deduct our $8,000 IRA contributions (we're MFJ and below the AGI phaseout threshold)? All publications I read talk about active participants in 401(k) not being able to deduct IRA contributions, however it's not clear to me as to who is an active participant - one who actually contributed to 401(k) or one eligible to contribute. Thanks!

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Both my husband and I were eligible to participate in the

401(k) in 2006, however none of us participated. Can we still fully deduct our $8,000 IRA contributions (we're MFJ and below the AGI phaseout threshold)? All publications I read talk about active participants in 401(k) not being able to deduct IRA contributions, however it's not clear to me as to who is an active participant - one who actually contributed to 401(k) or one eligible to contribute. Thanks!

Since you're below the phaseout threshold, why does it matter? You can deduct the IRA contribution whether you participated in the 401k or not.

If your joint AGI is below the phaseout start, then you can deduct your IRA contributions.

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