Client was terminated in 2019 and received severance payment in January 2020. Clients W2 is marked as retirement plan participant. This prevents deductible traditional IRA contribution. Since client has no 2020 participation in the 401k plan due to termination can he make a deductible contribution to IRA ??
In order to do this one must uncheck retirement box on W2 to allow deduction ??
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From: https://www.irs.gov/retirement-plans/common-errors-on-form-w2-codes-for-retirement-plans
"Form W-2, Box 13
The “Retirement plan” indicator in Box 13 shows whether an employee is an active participant in your company’s plan. If this box is checked, it lets the recipient know that depending on their filing status and modified adjusted gross income, they may not be entitled to a full deduction for their traditional IRA contributions. You should check the retirement plan box if an employee was an “active participant” for any part of the year in:
Active participant
Generally, an employee is an active participant if covered by a:
Don’t check the retirement plan box if your company only has non-qualified or 457(b) plans."
Also, read: https://www.irs.gov/retirement-plans/are-you-covered-by-an-employers-retirement-plan
That way, you know what to look for that is the defining issue.
Not if his income is too high.
He may have received an employer contribution or allocation of forfeitures making the retirement plan box correct.
Otherwise he would have to get the employer to correct the W-2.
EDIT: He may also have been eligible to have some of that severance pay contributed to the 401(k).
This seems like you started the Same Topic you had already asked, here:
I will mark the first one to be deleted. There is no need to keep starting new topics. This is not Live Chat. The same people that saw the first time you asked, also see the second time you asked.
From: https://www.irs.gov/retirement-plans/common-errors-on-form-w2-codes-for-retirement-plans
"Form W-2, Box 13
The “Retirement plan” indicator in Box 13 shows whether an employee is an active participant in your company’s plan. If this box is checked, it lets the recipient know that depending on their filing status and modified adjusted gross income, they may not be entitled to a full deduction for their traditional IRA contributions. You should check the retirement plan box if an employee was an “active participant” for any part of the year in:
Active participant
Generally, an employee is an active participant if covered by a:
Don’t check the retirement plan box if your company only has non-qualified or 457(b) plans."
Also, read: https://www.irs.gov/retirement-plans/are-you-covered-by-an-employers-retirement-plan
That way, you know what to look for that is the defining issue.
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