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Dear Dr. Don,
I will be rolling over my retirement funds (approximately $21,000) from my most recent job into a traditional rollover IRA. Can I claim a contribution on my taxes for the $5,000 per year that is allowable?
If not, what can I do? — Stephanie Stymied
Dear Stephanie,
Transferring your retirement funds from your previous employer into a traditional IRA rollover does not count as a new contribution to an IRA. It’s considered a rollover contribution. Your contributions to your employer’s plan were tax-deferred compensation when you made them. You don’t get two tax breaks on one deferral.
As for the last question — “If not, what can I do?” — your options haven’t changed just because the rollover contribution isn’t a tax-deductible contribution. You can keep the money with your old employer’s plan or roll it over into a traditional IRA (or a Roth IRA if you are eligible).
Publication 590 has all the details, but talk to your tax professional if you’re uncertain about which choice is best for you.
To ask a question of Dr. Don, go to the “Ask the Experts” page, and select one of these topics: “Financing a home,” “Saving & investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.
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