Por: Dennis Falvy  

Muchos no conocen y es importante aclarar que cuando se retiran los fondos del 401 (k), antes de la edad de la jubilación, hay que pagar los impuestos que no fueron cobrados por el gobierno al depositar el dinero, pues la “gollería “ era que estos de diferían para una mejor gestión y rentabilidad . Además es muy posible que la empresa de inversiones le cobre una penalidad del 10% por retiros anticipados.

En rigor,la falta de conocimiento sobre el 401(k) es una de las barreras que tienen los hispanos al colocar su dinero en estos planes de inversión, de acuerdo con expertos en finanzas.

Así que por ello , es mejor hacer una síntesis de ello; así como del IRA:

¿CÓMO FUNCIONAN? ¿CUÁNDO PUEDO RETIRAR MI DINERO? ¿QUÉ PASA SI CAMBIO DE TRABAJO?

Estas son algunas de las preguntas que se hacen los hispanos a la hora de invertir el dinero en estas cuentas para al retiro. A continuación las respuestas a algunas de estas interrogantes.

¿QUÉ ES EL 401 K?( Ver Quote a pie de página)

Es un beneficio que ofrecen algunas empresas a sus empleados para ayudarles a ahorrar para la jubilación. Estos planes de contribución definida tienen límites en el monto que puede ser invertido y el dinero es deducido directamente de su salario antes de impuestos. Dependiendo del plan, el empleador está obligado a contribuir con cierta cantidad o tiene la opción de hacerlo. Y en caso de hacer la contribución, el empleado tiene derecho a tomar posesión del aporte de forma automática o en un periodo específico según lo defina el plan.

¿CÓMO FUNCIONA?

El empleado elige qué cantidad de dinero quiere invertir – hasta un limite establecido por el plan- y esa contribución se deducirá automáticamente de su salario. La aportación se realiza antes del cobro de impuestos al ingreso. Luego se depositará directamente en el plan de inversión que el empleado haya elegido.

Esta selección puede incluir fondos mutuos, títulos de valores individuales, anualidades o bonos. Tanto la elección de los instrumentos de inversión como el riesgo de las inversiones recaen sobre el empleado y no sobre el empleador.

¿PUEDO SACAR ESE DINERO?

Estos planes están concebidos como una forma de ahorro para la vejez, por lo que el Servicio de Rentas Internas restringe el acceso a estos fondos antes de la jubilación. Es posible que su plan le permita hacer retiros por dificultades económicas.

EL IRS( ES DECIR LA SUNAT DE LOS EEUU; INTERNAL REVENUE SERVICES) ) ACEPTA SEIS RAZONES QUE PUDIERA CONSIDERAR COMO NECESIDAD FINANCIERA INMEDIATA:

a) Ciertos gastos médicos no reembolsados.

b) La compra de la residencia principal.

c) La matrícula de una institución post secundaria para el año siguiente.

d) Evitar el desalojo o la ejecución de la hipoteca de su vivienda.

e) Ciertas catástrofes naturales.

f) Gastos funerarios.

¿ME COBRARÁN POR SACAR MI DINERO?

Es importante aclarar que cuando se retiran los fondos del 401 (k) antes de la edad de la jubilación, hay que pagar los impuestos que no fueron cobrados por el gobierno al depositar el dinero. Además es muy posible que la empresa de inversiones le cobre una penalidad del 10% por retiros anticipados.

¿QUÉ PASA CON EL DINERO SI CAMBIO DE COMPAÑÍA?

Si cambia de trabajo generalmente, tendrá cuatro opciones con respecto a su dinero:

A) Puede dejar su dinero en el plan actual.

B) Puede transferir (roll over) su dinero directamente a un plan de jubilación autorizado patrocinado por otro empleador.

C) Puede transferir su dinero a una cuenta de jubilación individual (IRA, por sus siglas en inglés) que no están patrocinadas por una empresa.

D) Puede efectuar un retiro total o parcial en efectivo. En este caso tendrá que pagar los impuestos que no han sido cobrados sobre este dinero y posiblemente algunas penalizaciones.

La mejor forma de realizar estas transacciones es comunicándose con su antiguo empleador y con la empresa nueva para que le expliquen cómo realizar estas transacciones.

¿CUÁNTO DEBERÍA ESTAR AHORRANDO EN MI PLAN 401(K)?

La mayoría de los asesores financieros recomiendan se ahorre al menos un 10% del salario.

Sin embargo, si eso resulta demasiado difícil, pruebe con la opción de un 1%. Empiece ahorrando una cantidad que pueda afrontar y cada año que pase aumente en un 1%.

Pronto estará ahorrando más de lo que podía haber imaginado.

¿QUÉ SUCEDE CON MI DINERO SI ME MUERO?

Un empleado que tiene un 401(k) puede decidir quién va a recibir su dinero si se muere. Cuando una persona fallece, la persona que elija como beneficiario va a recibir el dinero en su 401(k).

¿CUÁNDO PUEDO RETIRAR MI DINERO?

Su dinero lo puede retirar sin asumir ningún tipo de recargos o penalidades después de cumplir los 59.5 años de edad o en caso de su muerte este dinero se distribuye a su esposa(o) o al beneficiarlo.

YO QUIERO COMENZAR A CONTRIBUIR A UN 401K, ¿POR DONDE COMIENZO?

Hable con su departamento de recursos humanos y pregunte acerca de los planes de pensión que hay disponibles en su compañía y si existen beneficios adicionales, como por ejemplo si ellos contribuyen dinero adicional sobre el dinero que usted contribuiría.

Fuentes: IRS.gov, Fidelity.com, Vanguard.comn, ING.us, chase.com

¿ QUE ES EL IRA´S? ( Ver quote N.2)

An individual retirement account or IRA is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantages for retirement savings in the United States. An individual retirement account is a type of "individual retirement arrangement" as described in IRS Publication 590, individual retirement arrangements (IRAs). The term IRA, used to describe both individual retirement accounts and the broader category of individual retirement arrangements, encompasses an individual retirement account; a trust or custodial account set up for the exclusive benefit of taxpayers or their beneficiaries; and an individual retirement annuity, by which the taxpayers purchase an annuity contract or an endowment contract from a life insurance company.  

As of 2010, low savings rates, financial crises, and poor stock market performance had caused retirement savings account values to fall so low that 75% of Americans nearing retirement age had less than $30,000 in their retirement accounts, which Forbes called "the greatest retirement crisis in American history."

COMENTARIO

Como se ve, eso de que el chileno José Piñera Echenique invento de cero, el tema de las AFP´s no es nada cierto ¿No les parece?. El IRA se creo en 1974 y el 401 (K) fue ok desde el año 1978,  a través del IRS (Internal Revenue Service) y he colocado como Quotes mayor información sobre este 401 (K) e IRA , para quienes le interese.

Aquí este reciente e interesante post que publica el WALL STREET JOURNAL . Como siempre y aunque la traducción no es muy buena : El cursor al texto y click a la derecha y lo pueden leer en castellano.

Baby boomer, por si acaso, es un término usado para describir a las personas que nacieron durante el baby boom, que sucedió en algunos países anglosajones, en el período momentáneo y posterior a la Segunda Guerra Mundial, entre años 1946 y 1965.

PULLING RETIREMENT CASH, BUT NOT BY CHOICE

Baby boomers’ mandatory withdrawals from 401(k)s, IRAs and other tax-deferred retirement accounts start in full force this year, touching off a massive shift of cash

By Vipal Monga and Sarah Krouse (WSJ)

Jack and Judy Weaver, both in their early 70s, have been retired for 13 years and are among a wave of baby boomers who are required to pull money from their 401(k) investments, resulting in unwanted taxes.

The largest generation in U.S. history has to start pulling its retirement money this year, kicking off a mandatory movement of cash that could total hundreds of billions in the coming decades.

U.S. law requires anyone age 70 ½ or older to begin annual withdrawals from their tax-sheltered retirement accounts and pay taxes on those distributions. The oldest of the nation’s 75 million baby boomers cross that threshold for the first time this month, according to a U.S. Census Bureau estimate of when that demographic group began.

The obligatory outflows from 401(k)s and IRAs are expected to ripple through the U.S. economy, the stock market and a money-management industry that relies heavily on fees from boomers’ tax-sheltered savings plans and assets.

Boomers hold roughly $10 trillion in tax-deferred savings accounts, according to an estimate by Edward Shane, a managing director at Bank of New York Mellon Corp. Over the next two decades, the number of people age 70 or older is expected to nearly double to 60 million—roughly the population of Italy.

Firms that manage 401(k) plans are trying to persuade clients to reinvest their withdrawals in other products rather than spending or donating the cash to charity. It’s another pain point for many traditional money managers already struggling to keep some clients from shifting into lower-cost index-tracking mutual funds.

Many hope to offset the required distributions with inflows from millennials, people in their 20s and 30s—who recently became the largest living generation, even though boomers, at their peak, were more populous.

Savers, meanwhile, are debating what to do with their cash as they wrestle with tax bills triggered by required distributions and worry about outliving their assets. On average, men and women who turned 65 in 2015 can expect to live another 19 and 21.5 years respectively, according to the U.S. Social Security Administration’s most recent life-expectancy estimates; those post-65 expectancies are up from 15.4 and 19 years for those who turned 65 in 1985.

Jack Weaver, a retired biopharmaceutical product developer, turned 70 in late 2015 and had to pay taxes on his first required payout of $31,000 last year. “It’s unwanted income,” he said. He reinvested the money, and says his wife plans to do the same when she takes her first distribution this year.

The rise of the 401(k) is inextricably linked with the surge in U.S. citizens born after the end of World War II. Boomers, defined by the U.S. Census Bureau as people born in the 18 years beginning in “mid 1946,” embraced tax-deferred retirement accounts and made them a widespread savings tool in the 1980s and 1990s. The plans largely replaced traditional pensions, and helped create a multi-trillion-dollar industry supporting hundreds of investment firms and financial planners. 

Contributions to tax-deferred retirement plans outnumbered withdrawals through much of the 1990s and 2000s. That flow began to reverse as boomers entered their retirement years earlier this decade.

Investors pulled a net $9 billion from workplace retirement-savings plans in 2013, according to the Labor Department. In 2014 the withdrawals jumped to net $24.9 billion. Full-year information for 2015 from the Labor Department isn’t yet available, but large mutual-fund companies that manage the bulk of U.S. retirement assets say outflows continue to rise. Fidelity Investments expects 100,000 customers to take their first required distributions in 2017, up from 91,000 in 2016.

The withdrawals thus far are small when compared with the roughly $15 trillion parked in U.S. tax-deferred retirement plans, according to a September 2016 estimate by the trade group Investment Company Institute. Brian Reid, chief economist at ICI, said asset gains could help cover some of the amounts retirees would have to withdraw.

Still, distributions are expected to grow exponentially over the next two decades because of a 1986 change to federal law designed to prevent the loss of tax revenue. Congress said savers who turn 70 ½ have to start taking withdrawals from tax-deferred savings plans or face a penalty. Specifically, retirees who turn 70 ½ have until April of the following calendar year to pull roughly 3.65% from their IRA and 401(k) funds, subject to slight differences in the way the funds are treated by the Internal Revenue Service. Then they must withdraw an increasing portion of their assets every year based on IRS formulas. The rules don’t apply to defined-benefit pensions, where retirees get automatic distributions.

The penalty for not taking distributions on time is a 50% tax bill on funds the retiree failed to withdraw.

The required distributions could come as a surprise to many boomers, said Alicia Munnell, director at Boston College’s Center for Retirement Research. “Individuals look at the pile of savings and think that’s their whole nest egg, not that they’ll have to pay some amount of that to the government,” she said. “It’s a very big deal when people realize they only have two-thirds or three-quarters of what they thought they had.”

Bronwyn Shone, a financial adviser in Pleasanton, Calif., said many of her clients aren’t aware of their legal obligation to take distributions. “I think some people thought they could let the money grow tax-deferred forever,” she said.

The outflows aren’t a surprise to most asset management firms, but they could force some dramatic changes. Firms will have to lower fees and offer more services to convince retirees to keep their savings at the firms, said Walt Bettinger, chief executive of brokerage firm Charles Schwab Corp. That would lower a firm’s profitability by raising costs per customer, he added.

Charles Schwab, which manages some $208 billion in 401(k) assets, typically has to move 10% of those funds around in any given year due to retirement, death or job changes. Mr. Bettinger expects that number to rise to 15% because of required withdrawals. “A 5 point increment of trillions in assets is a big number,” Mr. Bettinger said. “What’s happening is providers are having to be more aggressive to fill the gap.”

A Schwab spokesman said the company lowered fees on 401(k) plans about two years ago, by offering more low-cost options in exchange-traded or target-date funds. “We have been anticipating fee competition in 401(k)s for quite some time,” he said.

____________________________________________________________________ QUOTE  

In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code. Under the plan, retirement savings contributions are provided (and sometimes proportionately matched) by an employer, deducted from the employee's paycheck before taxation (therefore tax-deferred until withdrawn after retirement or as otherwise permitted by applicable law), and limited to a maximum pre-tax annual contribution of $18,000 (as of 2015).

Other employer-provided defined-contribution plans include 403(b) plans for nonprofit institutions, and 457(b) plans for governmental employers. These plans are all established under section 401(a) of the Internal Revenue Code. 401(a) plans may provide total annual addition of $53,000 (as of 2015) per plan participant, including both employee and employer contributions.

HISTORY

The section of the Internal Revenue Code that made 401(k) plans possible was enacted into law in 1978. It was intended to allow taxpayers a break on taxes on deferred income. In 1980, a benefits consultant named Ted Benna took note of the previously obscure provision and figured out that it could be used to create a simple, tax-advantaged way to save for retirement. The client for whom he was working at the time chose not to create a 401(k) plan. He later went on to install the first 401(k) plan at his own employer, The Johnson Companies[ (today doing business as Johnson Kendall & Johnson) At the time, employees could contribute 25% of their salary, up to $30,000 per year, to their employer's 401(k) plan.

TAXATION

With either pre-tax or after-tax contributions, earnings from investments in a 401(k) account (in the form of interest, dividends, or capital gains) are tax-deferred. The resulting compounding interest with delayed taxation is a major benefit of the 401(k) plan when held over long periods of time . Beginning in the 2006 tax year, employees have been allowed to designate contributions as a Roth 401(k) deferral. Similar to the provisions of a Roth IRA, these contributions are made on an after-tax basis.

For pre-tax contributions, the employee does not pay federal income tax on the amount of current income he or she defers to a 401(k) account, but does still pay the total 7.65% payroll taxes (social security and medicare). For example, a worker who otherwise earns $50,000 in a particular year and defers $3,000 into a 401(k) account that year only reports $47,000 in income on that year's tax return. Currently this would represent a near $750 term saving in taxes for a single worker, assuming the worker remained in the 25% marginal tax bracket and there were no other adjustments (e.g., deductions). The employee ultimately pays taxes on the money as he or she withdraws the funds, generally during retirement. The character of any gains (including tax-favored capital gains) is transformed into "ordinary income" at the time the money is withdrawn.

If the employee made after-tax contributions to the non-Roth 401(k) account, these amounts are commingled with the pre-tax funds and simply add to the non-Roth 401(k) basis. When distributions are made the taxable portion of the distribution will be calculated as the ratio of the non-Roth contributions to the total 401(k) basis. The remainder of the distribution is tax-free and not included in gross income for the year.

For accumulated after-tax contributions and earnings in a designated Roth account (Roth 401(k)), "qualified distributions" can be made tax-free. To qualify, distributions must be made more than 5 years after the first designated Roth contributions and not before the year in which the account owner turns age 59½, unless an exception applies as detailed in IRS code section 72(t). In the case of designated Roth contributions, the contributions being made on an after-tax basis means that the taxable income in the year of contribution is not decreased as it is with pre-tax contributions. Roth contributions are irrevocable and cannot be converted to pre-tax contributions at a later date. (In contrast to Roth individual retirement accounts (IRAs), where Roth contributions may be re characterized as pre-tax contributions.) Administratively, Roth contributions must be made to a separate account, and records must be kept that distinguish the amount of contribution and the corresponding earnings that are to receive Roth treatment.

Unlike the Roth IRA, there is no upper income limit capping eligibility for Roth 401(k) contributions. Individuals who find themselves disqualified from a Roth IRA may contribute to their Roth 401(k). Individuals who qualify for both can contribute the maximum statutory amounts into either or a combination of the two plans (including both catch-up contributions if applicable). Aggregate statutory annual limits set by the IRS will apply.

WITHDRAWAL OF FUNDS

The Internal Revenue Code imposes severe restrictions on withdrawals of pre-tax or Roth contributions while a person remains in service with the company and is under the age of 59½. Any withdrawal that is permitted before the age of 59½ is subject to an excise tax equal to ten percent of the amount distributed (on top of the ordinary income tax that has to be paid), including withdrawals to pay expenses due to a hardship, except to the extent the distribution does not exceed the amount allowable as a deduction under Internal Revenue Code section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).

In any event any amounts are subject to normal taxation as ordinary income. The Internal Revenue Code generally defines hardship for this purpose as

• Unreimbursed medical expenses for the participant, the participant's spouse, or the participant's dependent.

• Payment of college tuition and related educational costs such as room and board for the next 12 months for the participant, the participant's spouse or dependents, or children who are no longer dependents.

• Payments necessary to prevent eviction from the participant's home, or foreclosure on the mortgage of a principal residence.

• For funeral expenses.

Some employers may disallow one, several, or all of the previous hardship causes. Someone wishing to withdraw from such a 401(k) plan would have to resign from their employer. To maintain the tax advantage for income deferred into a 401(k), the law stipulates the restriction that unless an exception applies, money must be kept in the plan or an equivalent tax deferred plan until the employee reaches 59½ years of age. Money that is withdrawn prior to the age of 59½ typically incurs a 10% penalty tax unless a further exception applies. This penalty is on top of the "ordinary income" tax that has to be paid on such a withdrawal. The exceptions to the 10% penalty include: the employee's death, the employee's total and permanent disability, separation from service in or after the year the employee reached age 55, substantially equal periodic payments under section 72(t), a qualified domestic relations order, and for deductible medical expenses (exceeding the 7.5% floor). This does not apply to the similar 457 plan.

Many plans also allow employees to take loans from their 401(k) to be repaid with after-tax funds at pre-defined interest rates. The interest proceeds then become part of the 401(k) balance. The loan itself is not taxable income nor subject to the 10% penalty as long as it is paid back in accordance with section 72(p) of the Internal Revenue Code. This section requires, among other things, that the loan be for a term no longer than 5 years (except for the purchase of a primary residence), that a "reasonable" rate of interest be charged, and that substantially equal payments (with payments made at least every calendar quarter) be made over the life of the loan. Employers, of course, have the option to make their plan's loan provisions more restrictive. When an employee does not make payments in accordance with the plan or IRS regulations, the outstanding loan balance will be declared in "default". A defaulted loan, and possibly accrued interest on the loan balance, becomes a taxable distribution to the employee in the year of default with all the same tax penalties and implications of a withdrawal.

These loans have been described as tax-disadvantaged, on the theory that the 401(k) contains before-tax dollars, but the loan is repaid with after-tax dollars. While this is precisely correct, the analysis is fundamentally flawed with regard to the loan principal amounts. From your perspective as the borrower, this is identical to a standard loan where you are not taxed when you get the loan, but you have to pay it back with taxed dollars. However, the interest portion of the loan repayments, which are essentially additional contributions to the 401(k), are made with after-tax funds but they do not increase the after-tax basis in the 401(k). Therefore, upon distribution/conversion of those funds the owner will have to pay taxes on those funds a second time.

REQUIRED MINIMUM DISTRIBUTIONS (RMD)

Account owners must begin making distributions from their accounts by April 1 of the calendar year after turning age 70½ or April 1 of the calendar year after retiring, whichever is later. The amount of distributions is based on life expectancy according to the relevant factors from the appropriate IRS tables.[14] There is an exception to minimum distribution for people still working once they reach that age. The exception only applies to the current plan they are participating in and does not apply if the account owner is a 5% owner of the business sponsoring the retirement plan. Required minimum distributions apply to both pretax and after-tax Roth contributions. Only a Roth IRA is not subject to minimum distribution rules. Other than the exception for continuing to work after age 70½ differs from the rules for IRA minimum distributions. The same penalty applies to the failure to make the minimum distribution. The penalty is 50% of the amount that should have been distributed, one of the most severe penalties the IRS applies. In response to the economic crisis, Congress suspended the RMD requirement for 2009.

FORCE-OUT

Former employees ("terminated participants") can have their 401(k) accounts closed if their account balances are low; such a provision in the plan is referred to as a "force-out" provision. Almost 90% of plans have a force-out provision.[16] As of March 2005, the limit for force-out provisions is a balance of $1,000—participants whose balance is over $1,000 cannot have their account closed. Before March 2005, the limit was $5,000.

Closing an account requires that the participant either roll-over the funds to an IRA, another 401(k) plan or take a distribution ("cash out"). 85% of those with balances of under $1,000 cash out, either voluntarily or due to a force-out provision.

Rollovers between eligible retirement plans are accomplished in one of two ways: by a distribution to the participant and a subsequent rollover to another plan or by a direct rollover from plan to plan. Rollovers after a distribution to the participant must generally be accomplished within 60 days of the distribution. If the 60-day limit is not met, the rollover will be disallowed and the distribution will be taxed as ordinary income and the 10% penalty will apply, if applicable. The same rules and restrictions apply to rollovers from plans to IRAs.

DIRECT ROLLOVERS

A direct rollover from an eligible retirement plan to another eligible retirement plan is not taxable, regardless of the age of the participant.

TRADITIONAL TO ROTH CONVERSIONS

In 2013 the IRS began allowing conversions of existing Traditional 401(k) contributions to Roth 401(k). In order to do so, an employee's company plan must offer both a Traditional and Roth option and explicitly permit such a conversion.

AND … SO ON AND SO FORTH …

INDIVIDUAL RETIREMENT ACCOUNT ( IRA)

Individual retirement arrangements were introduced in 1974 with the enactment of the Employee Retirement Income Security Act (ERISA). Taxpayers could contribute up to fifteen percent of their annual income or $1,500, whichever is less, each year and reduce their taxable income by the amount of their contributions. The contributions could be invested in a special United States bond paying six percent interest, annuities that begin paying upon reaching age 59½, or a trust maintained by a bank or an insurance company.

Initially, ERISA restricted IRAs to workers who were not covered by a qualified employment-based retirement plan. In 1981, the Economic Recovery Tax Act (ERTA) allowed all working taxpayers under the age of 70½ to contribute to an IRA, regardless of their coverage under a qualified plan. It also raised the maximum annual contribution to $2,000 and allowed participants to contribute $250 on behalf of a nonworking spouse. The Tax Reform Act of 1986 phased out the deduction for IRA contributions among workers covered by an employment-based retirement plan who earned more than $35,000 if single or over $50,000 if married filing jointly.[10] Other taxpayers could still make nondeductible contributions to an IRA.

The maximum amount allowed as an IRA contribution was $1,500 from 1975 to 1981, $2,000 from 1982 to 2001, $3,000 from 2002 to 2004, $4,000 from 2005 to 2007, and $5,000 from 2008 to 2010. Beginning in 2002, those over 50 years old could make an additional contribution called a "catch-up contribution."

CURRENT LIMITATIONS:

• An IRA can only be funded with cash or cash equivalents. Attempting to transfer any other type of asset into the IRA is a prohibited transaction and disqualifies the fund from its beneficial tax treatment.

• Additionally, an IRA (or any other tax-advantaged retirement plan) can only be funded with that the IRS calls "taxable compensation". This in turn means that certain types of income cannot be used to contribute to an IRA; these include but are not limited to:

• Any unearned taxable income.

• Any tax-exempt income, apart from military combat pay.

• Social Security payments, whether retirement pensions or disability payments, may or may not be taxable, but in either case are not eligible.

• Child support payments received. (On the other hand, alimony and separate maintenance payments, if taxable, are eligible.)

• Graduate school stipends, unless they are reported on a W-2 (indicating that they were compensation for services rendered, usually teaching).

• Rollovers, transfers, and conversions between IRAs and other retirement arrangements can include any asset.

• 2014 and 2015: the total contributions a person can make to all of their traditional and Roth IRAs cannot be more than the lesser amount of either: $5,500 ($6,500 if you’re age 50 or older), or your earned income for the year.

• This limit applies to the total annual contributions to both Roth IRAs and traditional IRAs. For example, a person aged 45, who put $3,500 into a traditional IRA this year so far, can either put $2,000 more into this traditional IRA, or $2,000 in a Roth IRA, or some combination of those.

• The amount of the traditional IRA contributions that can be deducted is partially reduced for levels of income beyond a threshold, and eliminated entirely beyond another threshold, if the contributor or the contributor's spouse is covered by an employer-based retirement plan. The dollar amounts of the thresholds vary depending on tax filing status (single, married, etc.) and on which spouse is covered at work (see IRS Publication 590-A, "Contributions to Individual Retirement Arrangements (IRAs)").

• AND ALSO SO ON AND SO FORTH…