When A Qualified Plan is Deemed an IRA
For years after 2001, where a "qualified
employer plan" elects
to allow employees to make voluntary employee contributions
into a separate account or annuity in a "qualified
employer plan" it will be considered a "deemed
IRA".
Deemed IRAs are treated in the same manner as an individual
retirement account or annuity. This gives the employees
participating in their employer's qualified plan the
option to designate
their voluntary contribution into a separate conventional
or Roth IRA.
However, all of the normal IRA income and AGI limitations
will apply to "deemed IRA" contributions. This
can create problems if an individual also contributes to
a regular IRA and the combination of the regular IRA and
the deemed IRA exceed the annual limitation. Another trap
exists when a taxpayer designates the deemed IRA as a Roth
IRA and later discovers their income disqualifies them
from having a Roth IRA. If you are not sure of the implications
of deemed IRA designations for your specific circumstances,
you are urged to consult with your tax or financial advisor.
Conventional
IRAs ROTH
IRAs DEEMED
IRAs
Participation
in Other Retirement Plans
Contribution
Limits Education
IRAs
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