I worked as a consultant on W2 from January 2012 until October 2012. My company did not offer any 401k. In November 2012, I got a full time job and the new company offered a 401K and enrolled me in the plan.

Since I was not offered any 401k for most of the year, I maxed out my Traditional IRA before joining the new company.

The company that I joined in November 2012 put the default 2% in my 401k which came in my W2 as $300.

My question is: Can I still deduct my Traditional IRA contribution?


It depends.

For 2012 the phaseout range for deducting an IRA contribution when you are covered by a retirement plan at work are as follows:

  • For single filers: $58,000 to $68,000
  • For head of household filers: $58,000 to $68,000
  • For married couples filing jointly: $92,000 to $112,000
  • For married couples filing separately: $0 to $10,000

Unfortunately, 'covered' isn't qualified by any minimum time.

  • Its not qualified by any minimum because you can technically deposit the whole $17000 in your 401k in one lump sum, as long as you earned as much. But the OP can either withdraw the excess IRA contribution, or leave it as non-deductible, or convert to ROTH.
    – littleadv
    Mar 23 '13 at 20:04
  • @JoeTaxpayer: Are you referring to gross income or net income?
    – Asdfg
    Mar 23 '13 at 22:14
  • The IRA phaseout number are Adjusted Gross Income Mar 23 '13 at 22:55
  • Thanks. I did some research and i think i either have to move the excess contribution either to ROTH ira or withdraw it. I probably withdraw it and put it towards my car loan.
    – Asdfg
    Mar 23 '13 at 23:15
  • @Asdfg: I would recommend that you recharacterize it to a Roth IRA.
    – user102008
    Mar 24 '13 at 6:02

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