401(a) CalSTRS

[Guest S.Racer]

Can anyone tell me (or point me to something official) if the CalSTRS DB program causes our IRA deductions to phase out due to participating in a "retirement plan"? It would seem to me that since it is not voluntary, that it shouldn't be considered. My new tax guy says that my wife's IRA is not deductible because she is a FT teacher contributing to CalSTRS. (we've always deducted it in the past and she is not contributing to any other plan like 403b or 457)

Steve Walters

[Guest mjb]

According to IRS publication 590 (P14), available at www.irs.gov, deductible IRA contributions are phased out beginning at an AGI of 75k for a married employee who participates in an employer sponsored retirement plan, regardless of whether or not participation is voluntary.

[SoCalActuary]

The thoery is:

These people make middle income wages (more than IRS agents),

they already have a retirement income, and so...

why do they need another tax shelter?

[AndyH]

Steve,

Aside from "control", wouldn't her participation in a 403(b) or 457 accomplish the same thing as an IRA?