IRA question

Both your qualified retirement plan (403b) and IRA must be funded with "taxable compensation", or earned income. If I understand your question, you will only have $5K of earnings in the calendar year, so that is the limit of what can be contributed -- in toto -- to the two plans. I guess that makes the answer to your question - NO.

Sure you can put that 5000 into an IRA.

But your AGI will determine if you can deduct it, and if you cannot deduct it, might want to put it into a Roth IRA. You are considered covered by a qualified plan even if you were covered one day in that year. So the AGI phase out for deducting your IRA contributions for a Single taxpayer begins at 50,000 and is phased out entirely at 60,000. __ Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

If you were covered for even one day under an employer retirement plan, it counts for the entire year. The amount you contributed to the 403b plan in irrelevant. You can always make a traditional IRA contribution up to the allowed amount. Given that you were an active participant in an employer plan, your ability to DEDUCT that contribution may be limited, depending on your modified adjusted gross income. There are worksheets available with most software packages, as well as Table 17-1 of IRS Publication 17. If you are married and your spouse was not an active participant, there may be increased deductiblity if the contribution is made by the spouse.

-Mark Bole

To elaborate on "allowed amount", I forgot to mention the compensation test. If you had no additional compensation for the year, nor did your spouse (if any), then no, you are not allowed a contribution beyond your compensation amount.

-Mark Bole

Yes.

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

I'm stumped as to how you seem to be in a 403(b) plan that withholds 80 - 100% of your pay? Typically, an employee's contribution to a 403(b) is through payroll deduction at a percentage of your pay. That percentage is never near 80 to

Let's say I earn $5K a month as a college professor, and I tell my payroll person in Decembre that the next caledner year I am likely leaving my job early and request that they deduct all they can from my salary each pay period, until my annual limit is hit (in like April), instead of taking the payroll deductions over 12 months. That way, if I leave the job early, I can get the full $20K into my 403b instead of just 25 percent or so of it, Comprende?

Comprendo.

Now vama to your benefits people and find out the max percentage and amount per pay period you are able to contribute. The plan sets the limits, and no one here will know what it is. Buena fortuna.

-- Phil Marti Clarksburg, MD