IRA Tax Deduction when not eligible for a 401k plan partial year

Forum|Forum|8 years ago
April 7, 2018
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In 2017, I worked from January - March on one W2 contract position where I was eligible and participated in a company 401k. From April - June I was not employed and from July - December (and current), I have been working on another W2 contract position where I was NOT eligible for a 401k plan. When I enter an IRA deduction for 2017, I get a message that my AGI is too high for someone who is eligible for a 401k retirement plan and I received NO deduction. But I was not eligible for any retirement plan from March - December of 2017 so I think I can be allowed that deduction, correct?

I cannot find anywhere in Turbotax (I'm using the online version) to indicate that I did not have 401k eligibility for 9 months last year. I have entered two W4's, one has 401k info (Jan-March) and the second does not. Is Turbotax making an assumption on the first W4? Is there any way to change this? Otherwise I will have to file using another service or manually.

Thanks

M

mew5280Author

Employee

Answering my own question... On my third hour of internet research, I finally found the answer. If you are covered by an employer 401k for even 1 hour of a year, for tax purposes, you are considered covered for the entire year. If you contribute to an IRA, you do not get a deduction on this until you retire. Seems like a really silly way to do this but that's the answer.