Members of the Maryland Association of Certified Public...


January 28, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: Can the amount of an IRA be deductible or pro-rated if you weren't a member of a qualified retirement plan for the whole year? Are the contributions you made to an IRA before you became part of a pension plan deductible even if you are not eligible for deducting the contribution to an IRA once you belonged to a plan?

A: No. You are considered an active participant in a defined pension benefit plan for the entire year if you participate for any part of the plan year. If your total adjusted gross income is less than $35,000 for an individual filer or $50,000 for a married couple, then a contribution may be made to an IRA.

Q: Can you have a 401(k) pension plan and also have a Keough plan if you are a partner in a business and have over a 10 percent interest?

A: No. Only sole proprietors or partnerships (not partners) can establish Keough plans for themselves and employees. If you are a general partner and the income from your partnership is considered self-employment income, you may want to set up a SEP-IRA plan, which is another type of retirement savings plan.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

A joint service from The Baltimore Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15 and also offer a Tax Tip of the Week.

To submit a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear the tax tip. Selected questions will be answered in the Business section. No questions will be answered by phone.

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