Re: retirement accounts for contract employees?

From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: retirement accounts for contract employees?
Date: Sat, 8 Aug 1998 15:41:00 -0400

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>If I understand it correctly, I *can't* open a tax-deductible IRA in the
>same calendar year during which I have participated in a 401(k) plan. Have I

Probably correct.  Participating in a 401(k) for even one day in a
tax year means you are subject to the income tests on IRA deductibility.
Depending on your AGI, you can deduct some, none, or all of your IRA
contribution.  See Pub 590 for the details.

Pedantic note -- there's no such thing as a "deductible IRA" or
a "non-deductible IRA."  There are traditional IRAs, Roth IRAs,
and Education IRAs.  With respect to the first, you can (until age
70.5) always contribute $2000/yr (or earned income, whichever is less).
Whether you can deduct any or all of the contribution depends on if
you participate in a qualified plan, and if so, what your AGI is.
Non-deductible contributions cannot be segregated into an individual
IRA account.  Once a non-deductible contribution is made, it becomes
proportionally part of all your traditional IRA account.

Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1



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