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Subject Author Date
Deductability of IRA - No 2007 Contribution to Retirement Plan richard2007 04-07-2008
Posted by richard2007 on April 7, 2008, 4:25 pm
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 I work for one of UC universities.

My income for 2007 was 100k.

I made no contributions whatsoever to the 403 b and 457 plans that
were
available to me. My balance in both these plans is $0.

I opened a traditional IRA and put $5,000 into it today. I was told
that
since I did not contribute to the 403 b and 457 plans, I could deduct
the
$5,000 as an IRA deduction on the 2007 1040. Is that correct?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Phil Marti on April 7, 2008, 4:56 pm
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 "richard2007" wrote:

>I work for one of UC universities.
>
> My income for 2007 was 100k.
>
> I made no contributions whatsoever to the 403 b and 457 plans that
> were
> available to me. My balance in both these plans is $0.
>
> I opened a traditional IRA and put $5,000 into it today. I was told
> that
> since I did not contribute to the 403 b and 457 plans, I could deduct
> the
> $5,000 as an IRA deduction on the 2007 1040. Is that correct?

Shame on you if you're teaching English and making such inconvenient use of
passive voice. It would be helpful to know who told you this.

It appears you were not "covered" by a defined contribution plan for 2007.
See IRS Publication 590. Missing from the narrative is whether the
"Retirement plan" box is checked on your W-2 and whether you were covered by
a defined benefit plan, e.g., CALPERS. If the box is checked on your W-2
you need to find out why.

Also missing is your age. If you were under 50 as of 1/1/2008 you made a
$1,000 excess contribution for 2007, regardless of whether it's deductible.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by PeterL on April 7, 2008, 5:29 pm
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> I work for one of UC universities.
>
> My income for 2007 was 100k.
>
> I made no contributions whatsoever to the 403 b and 457 plans that
> were
> available to me. My balance in both these plans is $0.
>
> I opened a traditional IRA and put $5,000 into it today. I was told
> that
> since I did not contribute to the 403 b and 457 plans, I could deduct
> the
> $5,000 as an IRA deduction on the 2007 1040. Is that correct?
>


But aren't you covered by a defined benefit retirement plan (i.e.
UCRP)?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by richard2007 on April 7, 2008, 7:36 pm
Please log in for more thread options
>
> > I work for one of UC universities.
>
> > My income for 2007 was 100k.
>
> > I made no contributions whatsoever to the 403 b and 457 plans that
> > were
> > available to me. My balance in both these plans is $0.
>
> > I opened a traditional IRA and put $5,000 into it today. I was told
> > that
> > since I did not contribute to the 403 b and 457 plans, I could deduct
> > the
> > $5,000 as an IRA deduction on the 2007 1040. Is that correct?
>
> But aren't you covered by a defined benefit retirement plan (i.e.
> UCRP)?
>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used,   >>
> << nor can it used, for the purpose of avoiding penalties  >>
> << that may be imposed upon the taxpayer.                  >>
> <<                                                         >>
> <<   The Charter and the Guidelines for submitting posts   >>
> <<  to this newsgroup as well as our anti-spamming policy  >>
> <<                  are atwww.asktax.org.                 >>
> <<         Copyright (2007) - All rights reserved.         >>
> << ------------------------------------------------------- >>

I am clearly not entitled to the deduction. The box is checked on my
W-2 for covered by an employers' plan. I am over 50. I got the bum
advice from a finanical institution.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Phil Marti on April 7, 2008, 8:25 pm
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"richard2007" wrote:

> I am clearly not entitled to the deduction. The box is checked on my
> W-2 for covered by an employers' plan. I am over 50. I got the bum
> advice from a finanical institution.

Sadly, not the first time someone's been led astray by a bank employee
dispensing tax guidance.

IIRC you said that your 2007 income was about $100,000. You may qualify for
a Roth IRA contribution, and it's possible to transform the traditional IRA
contribution you made into a Roth contribution if you meet the income level.

If you're interested in pursuing this, step 1 is to compute your Modified
Adjusted Gross income for Roth purposes. Download a copy of IRS Publication
590 from www.irs.gov and see chapter 2 for the calculation method.

Get back to us with that figure and we can propose some options.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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