General
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Am I considered covered by an employer sponsored retirement plan for the year if I do not participate in the plan or if I did not work long enough to be vested?
The answer to this question depends on your type of retirement plan. If your employer's plan has a separate account for each employee and any amount was contributed or allocated by you or your employer to your account, you are considered covered. This is called a defined contribution plan. With this type of plan, it does not matter if you have worked long enough to be vested.
In the other type of plan, the plan employer must make enough contributions (together with earnings) to provide the retirement benefit promised in the retirement plan. This is called a defined benefit plan. In this type of plan, if you meet the minimum age and years of service requirements to participate in your employer's plan, you are considered covered even if you decline coverage. It does not matter if you are vested for this type of plan, either.
The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. The "Pension Plan" box should have a mark in it if you were covered.
References: 5.2 Pensions and Annuities: Contributions What is the maximum amount that I can contribute to my 401(k) plan?
For 2002, the maximum amount anyone can contribute to a 401(k) plan is $11,000 except for catch-up contributions for employees age 50 or over (see the next topic). There are several different limits that apply to a 401(k) plan in addition to the overall contribution limit. The maximum you can contribute will depend on your salary and the type of 401(k) plan to which you are contributing.
The rules for retirement plans are complex. Your plan administrator should have written information about your particular plan that explains these limitations as well as other regulations that apply.
For further information, refer to Tax Topic 424, 401(k) plans.
References: What is the 2002 limit for elective deferrals to 401(k) plans? What are the limits for other types of pension plans?
Elective deferrals into a section 401(k) plan are limited to $11,000 for 2002, except that employees age 50 or over may be eligible to make additional contributions to 2002. SeeTax Topic 424 401 (K) plans, for more information.
References: How is the dollar limit for 403(b) plans affected by the nondiscrimination requirements related to highly compensated employees?
A 403(b) plan is a tax-sheltered annuity plan for employees of public schools and certain tax-exempt organizations. Under a special coverage and nondiscrimination rule, if any employee may make elective deferrals, the plan is considered discriminatory unless the opportunity to make contributions deferrals of more than $200 pursuant to a salary reduction agreement is available to all employees on a basis that does not discriminate in favor of highly compensated employees. For more information, refer to Internal Revenue Code section 403(b)(1)(D),(12)(A)(ii).
The maximum elective deferral for 2002 that an employee may make to a 403 (b) plan is $11,000.00. This will increase to $12,000.00 for 2003, and $13,000.00 for 2004. In addition, employees age 50 or over may be eligible to make catchup contributions of $1000.00 in 2002 (see Publication 571 (PDF) chapter 10).
For more information about 403 (b) plans, refer to Publication 571 (PDF), Tax Sheltered Annuity Plans 403 (b) Plans.
References: - Publication 571 (PDF), Tax Sheltered Annuity Plans 403 (b) Plans
- IRS Code Sec. 402(g) (1)
17.3 Individual Retirement Arrangements (IRA): Roth IRA Do I report my nondeductible Roth IRA contributions on Form 8606?
There are no forms to report a Roth contribution. The financial institution, which is the trustee of your Roth IRA, will send you information on the amount in your Roth IRA. They will also send the information to the Internal Revenue Service. Use Form 8606 (PDF), Nondeductible IRAs and Coverdell ESAs, if you made a nondeductible contribution to a traditional IRA; converted from a traditional IRA, a SEP, or Simple IRA to a Roth IRA, received a distribution from a traditional IRA, a SEP, or a Simple IRA and made nondeductible contributions to a traditional IRA, or received a distribution from a Roth or Education IRA.
References: Can a person make a contribution to a SEP-IRA and a Roth IRA, too?
Yes, you can make a contribution to a SEP-IRA and a Roth IRA.
References: 17.4 Individual Retirement Arrangements (IRA): Traditional IRA Can an individual who is contributing to a SEP-IRA also contribute to a traditional IRA?
Yes, if they meet certain requirements. A SEP-IRA is considered a retirement plan, so the Adjusted Gross Income (AGI) limitations have to be considered. If your AGI, which is computed after the SEP contribution, is in excess of those limits, then the IRA contribution that you make would be nondeductible. The information on the AGI limits is in Publication 590 (PDF), Individual Retirement Arrangements (IRAs) , in the section How Much Can I Deduct?
References: I want to establish a traditional individual retirement arrangement (IRA) for my spouse, and I need additional information. What is the most I can contribute to a spousal IRA during the tax year?
If both you and your spouse work and both have taxable compensation, each of you can contribute up to $3,000 (or the amount of each IRA owner's compensation, if less) to a separate traditional IRA. Even if one spouse has little or no compensation, up to $3,000 can be contributed to each IRA if combined compensation is at least equal to the amount contributed to both IRAs and you file a joint return. You can contribute $3,000 to a separate IRA for your nonworking spouse if you file a joint return. Your total contribution to both your IRA and the spousal IRA for this year is limited to the smaller of $6,000 or your taxable compensation. You cannot contribute more than $3,000 to either IRA for the year. If you are 50 or older in 2002, the most that can be contributed to your traditional IRA for 2002 is the lesser of:
. $3,500 (up from $2,000), or
. Your compensation that you must include in income.
For additional information, refer to Tax Topic 451, Individual Retirement Arrangements (IRAs), or Publication 590 (PDF), Individual Retirement Arrangements (IRAs) .
References: Can I take an IRA deduction for the amount I contributed to a 401(k) plan last year?
No. A 401(k) plan is not an IRA. However, the amount you contributed is not included as income in box 1 of your W-2 form so you don't pay tax on it for 2002. For more information, refer to Tax Topic 424, 401(k) Plans, Publication 575 (PDF), Pension and Annuity Income, or Publication 560 (PDF), Retirement Plans for Small Business.
References: If I am covered by a employer sponsored retirement plan for part of the year, but work the rest of the year for an employer without a retirement plan, how much of my earnings may I deduct for a traditional IRA?
The amount you can deduct will be determined by your modified Adjusted Gross Income (AGI) and filing status. For specific information refer to Publication 590 (PDF), Individual Retirement Accounts (IRAs).
References:
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