Traditional IRA Deductible Contribution

[sjainhome]

I retired in 2020 and got RSU compensation in 2021  (yearly release of RSU awarded earlier) and reported on W2 of 2021. This W2 income is about $21K. Can I make deductible $7K contributions to Traditional IRA for me and same for my non-working wife for 2021 return. Clearly, I was not covered by any retirement plan during 2021 and beyond.  Also, in addition to RSU compensation, our joint income for 2021 is high due to deferred profit sharing from prior years, but this is from non-qualified plan (box 11). As far as I know, Traditional IRA does not have income limitation, as long as you are not covered by any retirement plan. Guidance on this will be greatly appreciated. Thanks.

 

[Kaye Thomas]

Determine this by looking at your Form W-2. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). If your RSU compensation appears in box 1 without offset in box 11, you can use it to support an IRA contribution. If not, I suspect the IRS would object.

[Author]

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