How long does an IRA have to be in effect? Here is why I ask....

- Cleint sponsors a 401(K) plan and maxes out
- Client makes an IRA contribution
- Client now wants to roll the IRA into the K plan

What is to prevent the client from doing this every year ... is there a rule that does just that?

Client CANNOT roll the nondeductible IRA into the 401(k) plan. Only deductible IRAs can currently be rolled into 401(k) plans.

Just because the client is covered by a qualified plan doesn't make the IRA contribution non-deductible. However, if the client is maxing out the 401(k) contribution, it is likely that his AGI is over the limit.

A married taxpayer can deduct contributions to both a 401K plan and IRA if the AGI does not exceed 65k (04) or 70K (05). Can he afford 16k in contributons in 04? A married employee with 100k in salary and no other taxable income can reduce taxable income for 13k in 401k, 8k for 125/129 plan, 3k each for cap losses, IRA and college tuition.