NinjaPigeon - My Flight to Financial Independence

Sunday, January 08, 2006

New job, 401k and IRA questions

Okay, so I started a new job on Jan 3rd. It pretty much is a dream job for me. Very interesting work, very good pay, and a very well respected company. However, I'm only a contractor right now (but on a W2 rather than 1099 through my recruiter), so I'm not contributing to a 401k anymore.

I've read that IRA contributions are not eligible for any tax deduction if you have a qualifying plan and make over X amount per year. Well, last year I made about $65k and had an employer plan, so I didn't contribute to a 401k. This year, however, I am not currently eligible for a 401k plan (not offered by my recruiter), but may be eligible around September, assuming I go permanent with my new company (which I plan on doing). I will be making around $85k this year.

So, since I'm not eligible right now for a 401k, and knowing that I will be eligible later in the year, and that I will exceed the AGI limit for deductions...Can I deduct a 4k IRA contribution as long as I make it prior to being eligible for my company 401k?

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