The IRS Audit Blog

New Business Runs Errands for Those Who Can’t

Road Runners is dedicated to running errands for those who can’t and inspiring others to lend a hand to people in need.

The Harry Thomas Show May 27th 2009 10 of 11

Question: How can I change the 401k to non-deductible, so I can contribute to my IRA for 2006?

My situation: I joined the company 401k plan in the mid-December 2006. Which I thought will start from beginning of 2007. However, my company started draw the money immediately and I didn’t notice until I got my W2 form recently. The 401k deduction is only $769 for year 2006. I have already put money on my IRA account which I can put $5000 for 2006, I’m 50 years old. Based on the IRS rule, I could not contribute to IRA if I have 401k and have AGI more than $80000 in 2006 which I did. Is there any way that I can change the 401k contribution to non-deductible, so I can contribute to my IRA?

Answer: Where you eligible to defer immediately upon joining? If so, you’re screwed. Even if you didn’t defer, you were eligible so you’d get an X in the box stating that you were covered by a 401k plan.

Some companies may have immediate eligibility but they have monthly entry dates. That date would be the first of the month following date of hire. Check your SPD. If that’s the case then your deferrals are not allowed because you are not an eligible participant. Have them pull out the deferrels as an excess contribution and issue a revised w-2 showing you as not being covered.

But, if it’s immediate eligibility and immediate entry then you’re out of luck. You’ll have to shift the IRA contribution to non-deductible status. The reverse can’t take place.

Bottom line it’s all about coverage…if you were covered by the 401k then you can’t use the IRA even if you chose not to contribute to the 401k.

Why can’t the Senate do anything?

Why, at the moment, does Washington, and the Senate in particular, seem so gridlocked?

What is the Difference Between MY Employer 401K and a Self Directed 401K?

For Wharton, Going Off Script Part of the Job

Memphis Mayor A C Wharton Jr. delivered his first state of the city address this week in a day crammed with several carefully planned events. Before t….

Evangelist’s compound raided in child abuse case

TaxWatch: Tax moves to make in January

The tax laws are still in flux. We’re waiting for the estate-tax law to be written, and Form 5405 for the home-buyer’s credit isn’t ready yet. To top it off, IRS started the year by announcing a major step-up in enforcement of tax preparers. This is going to be an interesting tax season. Are you ready?

1022-WEI #3—Mastering the Uniform Commercial Code with forms-MANUAL

Question: I got a certified letter from the IRS?

My husband got a notice that the mail lady tried to deliver a certifed letter from the IRS (well,actually the line marked Large envelope is marked) and we have to pick it up Monday. It is going to drive me nuts over the weekend, so I was wondering if anyone may have any ideas as to what could be in there? I already filed my taxes in February and got the refund as well. Could it be an audit, even though they already sent the refund? I have no idea what we would be getting audited over as my husband works only one job and we have no other income.
I just wanted to add that is the first letter we have ever gotten from them. There have been no others that were ignored, that is why this is so odd to me.

Answer: It’s not usually GOOD news, but no point in worrying until you pick it up and see what it’s about. If it’s bad news, you’d normally have gotten a couple other notices from the IRS before they sent something certified mail.

Even if you are getting audited, if you have nothing to hide you’ll be fine, it’s just maybe a pain to dig out all the documentation they’d ask for.

Good luck.

Father, sons returning to Vietnam

George W. Whitehouse, 89, of Emmaus, two of his children are part of humanitarian visit George W. Whitehouse, 89, of Emmaus, two of his children are part of humanitarian visit

RP2012 – Ron Paul on BloomBerg TV 7-21-09 “Audit the Fed” [HQ]