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Am I an Active Participant if I worked only one month?

Last Updated April 16, 2011

Question: 

I worked for only one month last year and then retired. I made a contribution to my traditional IRA for last year. Am I eligible to treat it as a deductible IRA  contribution ?

Answer: 

It depends.

If you are not an active participant, or married to an active participant, the contribution is fully deductible.

If you are an active participant, and/or married to an active participant, the deductibility of the contribution would be determined by your MAGI and tax filing status.

Despite the fact that you  worked for only one month, you can still be considered an active participant if you received contributions and/or benefits under the plan.  The determination of your ‘active participant ‘ status depends on the type of retirement plan, your eligibly for participating in the plan and/or if contributions are made  to the plan.

 

See Active Participant for examples of when an individual is considered an active participant under a plan. See also, Active Participant Status–Can You Deduct Your IRA Contribution?

 

This question was answered by Denise Appleby, CEO of Appleby Retirement Consulting Inc. Appleby Retirement Consulting  Inc provides products and services for retirement accounts to financial, tax and legal professionals.