Disallowed Ira Deduction For Year 2008

[BILL BRADY]

I have an issue with IRS for the year of 2008. One of my clients took a TRADTIONAL IRA deduction on her taxes in the amount of $3000.00. On her W-2 , BOX 13 "Retirement Plan" was not checked. She had an Adjusted Gross Income of $64,858.
I confirmed with her that she was not in any "employer-sponsored retirement plan ", nor had any plan available to her. However, the company where she works funds her
union pension plan completely, without any additional funding from her.

IRS DISALLOWED THE $3000.00, stating that her AGI was beyong the phase-out limit.

Was this because of the "employer-sponsered" union pension plan?, and if so, where in
the INTERNAL REVENUE CODE does it specifically mention union pension plans?

Any and all help would be greatly appreciated.

Thanks, Bill Brady

[gkaiseril]

" A trust created or organized in the United States by an employer for the exclusive benefit of his employees or their beneficiaries, or by an association of employees (which may include employees within the meaning of section 401 (c)(1)) for the exclusive benefit of its members or their beneficiaries"

I would expect that the 'an association of employees' would describe a union.

[Kram BergGold]

Question

I wonder how the IRS knew about the pension plan when the box was not checked.
Was there a corrected W-2 or did the company get audited?

[Bees Knees]

Its possible the same employer checked the pension box on the W-2s for other employees, or checked the pension box on the W-2s for previous years, or something along those lines that notified IRS that employees of this company are covered by an employer sponsored retirement plan.

Or there could be some form that the pension plan files with IRS that identifies plan participants, similar to the Form 5498 that IRA trustees file for each participant.

Regardless of how IRS found out, the retirement plan check box on the W-2 is NOT the final say on the issue. I've seen many W-2s with the retirement plan box not checked, and yet they were obviously a participant in an employer sponsored pension plan.

[FEDUKE404]

Another possibility

You may wish to take a careful look at any entries in Box 12 of the W2. Perhaps the IRS reached some "conclusions" based upon what was separately reported there?

FWIW, I really cannot envision any scenario where the IRS "knew" about coverage not indicated by an entry in the Box 13 area. Did you efile (check your own data file!) or could there be a corrected W2 in existence?

Also, any other W2s associated with this 2008 tax return??

FE

[whkrueg]

Disallowed Ira Deduction For Year 2008

I had a client that had the same thing happen for 2008. He retired in 2007, he was a school teacher. He worked one day in 2008 as a substitute teacher and part time as a football coach. He recived W2s without box 13 being checked and yet IRS said he was covered under a retirement plan and disallowed the IRA deduction.

We obtained a letter from the school district stating he was retired and thus no longer covered under the retirement plan. Haven't heard back from the IRS yet, hopefully they accept the the letter.

Wayne

[Nashville]

Married?

Was the guy married and filed a joint return?

"♫ Bill Brady, won't you please come home.♫"

[whkrueg]

Disallowed Ira Deduction For Year 2008

Nashville,

Yes, he is married and did file a joint return, his wife has not retired and is still covered under a pension. Accordingly there combined income was low enough to allow a full deduction, under the provisions where one spouse is covered and the other is not.

We'll see what the IRS says....

Wayne