IRA participation when company offers 401K..

[Guest Carl C]

Our company offers and I currently participate in the 401K plan. I have existing traditional and Roth IRA's from a time when we didn't have a 401K. My gross income is over $65K and I'm single.

If I elect not to participate in the 401K any more, can I contribute to the IRA's? Or does the mear fact that my employer offers the plan mean I have to choose it over the IRA? (I know that you can contribute to the IRA with income testing, but I believe I'm over that threshold).

Since Roth IRA contributions are made with after tax dollars, can I contribute to that plan while also contributing to the 401K?

Carl

[Guest LTurner]

First one must determine whether there are, or could be, any company contributions - such as profit sharing.... if so, your w2 would indicate you are covered by a pension plan and your ira may not be deductible.

[Guest philc]

Check out IRS Publication 590.

It will have the limits and restrictions on what is available to you.

[Blinky the 3-eyed Fish]

Carl, you are correct that by deferring into the 401(k) plan you become an active participant and any IRA contribution is not deductible. (I didn't look up the current AGI limits, but from memory agree you are probably over them.)

If you stop deferring and do not receive any other employer contributions, then you no longer are an active participant and can make deductible contributions to a traditional IRA. (Note, that if you already deferred for 2003, then too late.)

Contributions to a Roth IRA do not depend at all whether or not you are an active particpant in a plan.

[Guest merlin]

If memory serves (a dicey proposition these days), a forfeiture allocation will also make you an active participant, and thus ineligible for a deductible IRA contribution. Your employer may be able to tell about any contribution. I doubt he/she would know about a forfeiture allocation.