IRA Question

**Brian EA** · 03-31-2006, 01:23 PM

Originally posted by cynamoats

T/P receives a pension from the military. However, he is employed as an insurance agent and his profit from his Schedule C is enough to justify an IRA. Combined income between him and his wife is $97,000.

My software - Drake - will not allow T/P to take a deductible IRA because they are considering him to be an active partcipant in a pension plan. Does receiving a pension make one an active participant for the sake of taking a deductible IRA? I have never had this happen before.

If you receive retirement benefits from a previous employer's plan, you are not covered by that plan.
Pub 17 page 115. Go to screen 4 and enter his contributions

**cynamoats** · 03-31-2006, 02:27 PM

Still won't let me do it. I did email the file to Drake and they are telling me he doesn't qualify for an IRA deduction.

**JoshinNC** · 03-31-2006, 02:35 PM

Pub 590, pg 13

if you recieve benefits from a former employers plan you are not covered by that plan with respect to limiting of IRA contributions

**JoshinNC** · 03-31-2006, 02:42 PM

I use Drake too, and it works

I put in a pension of $27000, Schedule C of $50000 and W-2 of $20000 (total $97000). i then put in $4000 IRA contribution for taxpayer and $4000 for wife and it carries to 1040. might want to make sure you haven't marked anything that is disallowing the IRA contribtuion.

**jainen** · 03-31-2006, 02:45 PM

happens to me

Is he over age 70.5? When this sort of thing happens to me, it's always that I have checked box 13 on a W-2. It could be that I forgot to indicate the wife's W-2 as spouse, so the program thinks it belongs to him.

**JoshinNC** · 03-31-2006, 02:48 PM

yep, had that problem before too

make sure the wife's W-2 is marked spouse if she is an active participant, or it will throw everything out of whack!

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