Deductible contribution

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Deductible contribution

Amount paid into an IRA, an employer-sponsored retirement plan, or other type of retirement plan for a particular tax year that is a deduction from income for tax purposes.

Deductible Contribution

A contribution that one may place into an IRA, 401(k), or other retirement plan each year that can reduce one's taxable income by the same amount. That is, the deductible contribution is the portion of one's retirement contribution that is tax deductible. The IRS generally sets the limits on deductible contributions. For example, the limit on deductible contributions for 401(k) plans was $16,500 in 2009.
References in periodicals archive ?
Income thresholds also limit tax deductible contributions to a traditional IRA.
You can make deductible contributions to a traditional Individual Retirement Account on your 2010 return any lime before April 18.
Here's an example: A client owns an IRA worth $100,000, of which $45,000 is deductible contributions and earnings.
IRA contributors must decide if they would like to contribute to a Traditional or a Roth IRA, and whether they are eligible for deductible contributions to the Traditional IRA.
The Recycled Tire Research and Engineering Foundation has received 501-C-3 status from the Internal Revenue Service, positioning the foundation to receive tax deductible contributions, bequests, devices, transfers and gifts.
In some conservative 412(i) plans, businesses have made annual deductible contributions in excess of $200,000 for employees over age 50.
Your Traditional account has been open for a short period of time and most of the balance is comprised of non-deductible contributions: Since there is little growth in your current IRA and since no taxes are owed on non-deductible IRA contributions, your tax liability will be low at conversion because taxes are only paid on the growth funds and on the deductible contributions.
Thus, if a married couple is eligible to make deductible contributions to an IRA, they may make a total deductible contribution of up to $4,000, even if one of the spouses does not have any compensation for the year of the contribution.
This fact causes the number of years before the after-tax and after-penalty accumulation of a non-deductible IRA exceeds the after-tax accumulation of a non-IRA investment (breakeven point in years) to be greater for taxpayers with large IRA accumulations from deductible contributions.
One reliable way to reduce the impact of higher tax rates, surtaxes, phaseouts and so on is to make tax deductible contributions to retirement plans.
As with any trust whose funding is actuarially determined, the trust's earnings and the benefits actually paid to participants and beneficiaries may vary from the assumptions used to calculate deductible contributions.
An employer funds such a plan by making annual deductible contributions for eligible workers; the employees are not taxed on the contributions.