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There is a question on the tax form when filing that asks "eligible to participate in a 401K plan at work?" [Yes/No]. I contributed to my 401k up until March. I then took a new job that does not offer a 401K, and rolled mine into an IRA. I've now made 2,000 in contributions to my IRA and 2,200 to my Roth IRA.

How do I answer that question on the form (which impacts whether or not my IRA contributions are deductible or not) when its Yes and No?

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If you had a retirement plan at any time in 2013 you are considered covered by an plan.

Are You Covered by an Employer's Retirement Plan?

You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

  • Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;

  • IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or within the tax year; or

  • Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the plan year ending with or within the tax year.

Box 13 on the Form W-2 you receive from your employer should contain a check in the “Retirement plan” box if you are covered. If you are still not certain, check with your (or your spouse’s) employer.

The limits on the amount you can deduct don’t affect the amount you can contribute. However, you can never deduct more than you actually contribute.

Additional Resources:

Publication 590, Individual Retirement Arrangements (IRAs)

  • That sort of sucks. Because I only contributed $500 into my 401K this year before leaving because I left after 1 pay cycle. So by depositing once in it, negates my entire year of dumping into my IRA since 90% of the year I had NO access to a 401K, Pension, SEP, or employer sponsored IRA. So now I won't be able 2 deduct my marginal tax rate on2000 deposited into my deductible IRA(~500). Thanks for the info though. Doesn't seem fair that I sort of get penalized for going to a place that doesn't have a 401K from having access to one & not getting the benefit of IRA deposits for most of year. – Mark Dec 18 '13 at 12:10
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    @Mark: "So by depositing once in it," Even if you didn't contribute, the fact that you were covered is what matters. – user102008 Dec 18 '13 at 20:28
  • @Mark I agree that this answer, while correct, sucks. Consider contributing to a Roth if you are below the income limits. – Pete B. Dec 19 '13 at 9:41

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