Jump to content

Employer's Profit Share plan cause IRA to not be deductible?


Guest bayinsure
 Share

Recommended Posts

Sorry, I don't agree. See the following from IRS Notice 87-16.

A24: If an individual who is eligible to make elective deferrals under a CODA declines to make elective deferrals for a year, and no other contributions or forfeitures are allocated to such individual's account for the plan year ending with or within the individual's taxable year, is such individual an active participant for that year?

A: No. An individual shall not be an active participant merely due to eligibility to participate in a CODA.

Ok...suppose I should have looked at the instructions before I typed.

Seems illogical that we have to treat him as being covered for plan purposes yet he gets to treat himself as not being covered.

Link to comment
Share on other sites

  • 2 months later...
Sorry, I don't agree. See the following from IRS Notice 87-16.

A24: If an individual who is eligible to make elective deferrals under a CODA declines to make elective deferrals for a year, and no other contributions or forfeitures are allocated to such individual's account for the plan year ending with or within the individual's taxable year, is such individual an active participant for that year?

A: No. An individual shall not be an active participant merely due to eligibility to participate in a CODA.

Our government in action.

A participant just received an IRS notice that they disallowed their IRA deduction for 2005 because their modified AGI exceeded the $80000 limit for married couples filing jointly who both have a retirement plan at work. So if you have a retirement plan and receive a contribution whether discretionary as a profit sharing or mandatory as in a Top Heavy allocation, you can not deduct an IRA contribution?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...