Heads up if you get laid off and contribute to Traditional IRA same year
I had invested around $8,000 over the course of the first 6 months of 2024 into my company's 401k and was laid off. I was unemployed the rest of the year, and just before it ended spoke to a T Rowe Price rep about my options of retirement investing myself before 2025 began, he mentioned the Traditional IRA that would deduct the invested amount from my taxable income that year, or Roth where taxes would be taken out up front, then I could draw from untaxed in retirement.
I opted for Traditional IRA and put in the max of $7,000 in December 2024. Now that I'm filling out my taxes (single), that apparently was a mistake, because my IRA deduction is limited to only $200 because of the fact that I had access to a retirement plan at work the same year (even though I didn't contribute to the personal IRA until after I was laid off), and my MAGI range fell between their threshold of $77,000-$87,000 for the year. I would have been much better off contributing to the Roth IRA and just having taxes taken out now, since most of my traditional IRA contribution ended up taxed anyway and will get taxed again when I withdraw in retirement. Wish the T Rowe Price rep would have informed me of this possibility, but wanted to let anyone else know who may get laid off from a job they had a 401k at, and still want to invest in an IRA the same year.