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Can I deduct a contribution to a traditional IRA if I am also contributing to a 401(k) in the same tax year?

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If you are eligible to participate in an employer-provided retirement plan like a 401(k), your right to deduct an IRA contribution is phased out once your income reaches a certain level. Note this is true even if you choose not to participate.

This is from the IRS website for 2010:

"If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status."

Here is the link: https://www.irs.gov/forms-pubs/about-publication-590-a

  • 2
    It doesn't matter whether or not you participate in the 401(k) plan, all that matters is that you were "covered", i.e. eligible to participate. – DanTilkin Jul 16 '11 at 14:03
  • @DanTilkin good eye, I didn't catch that part. – Justin Ohms Jul 16 '11 at 17:20

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