IRA - Definition??

[PIGLEE]

I have a client that is pretty upset with me right now. When I put in the W-2, I failed to mark the box for retirement plan. I spent time with them showing them how much they would save if they put money into the IRA. Well they put it in before I did my final checks on the return. I put in the check on the W-2, and the IRA deduction disappeared. I figured out it was because their income was 109,946.00. They said their broker said today they would be penalized if they took it out, I say NO, but he is checking it out.

My question is about what is the definition of an ""employer-sponsored retirement plan""?
I remember coming across this years ago. The retirement plan he is in, is a State mandatory plan, not a choice. I think I remembered that they are marking the W-2 wrong. The retirement amount is in box 14 NOT box 12. But they do have the retirement box with a check in it.

Any suggestions??? Help is appreciated.

[JG EA]

He is by definition in a retirement plan. I try to tell people that all the numbers still have to be checked. But once this year I didn't tell a client that (even though I had said that every other year). And sure enough I made a mistake and she got less of a refund. She had already spend all of her refund and was very upset. So, I said that is why returns are checked. Wouldn't you rather know it is fixed before filing than have the IRS contact you a couple of years down the road? But, I learned my lesson and tell them not to do anything until the return is filed and the money is in their bank.

Just like this year dealing with direct deposits not going in on time. But you said.....

Anyway, look at it as a possitive. Tell them you are always trying to find deductions for them, but you are also very careful and have their best interests in mind.

[Lion]

Roth

Tell them the benefits of recharacterizing it as a Roth IRA...

[taxea]

I thought that:
if IRA contributions are in box 12 it is because they are contributed by the TP and deductible on his return.
if IRA is in box 14 the contribution was made by the employer and should not be subtracted from the TP gross income on the return

[Bees Knees]

But they do have the retirement box with a check in it.

If box 13 on the W-2 is checked, you have to assume they are an active participant in a retirement plan, regardless of what is in box 12 or 14. There are many plans where they can be an active participant with nothing to report in box 12 or 14.

TTB page 13-12 lists the types of plans that would make the employee an active participant. A plan for a state employee is included in that list.