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Should you extend your retirement date?

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Q. I plan on retiring at the end of the year. But if I work one month in 2010, will I qualify for IRA deductions? T.H., Eugene, Ore.

It depends. If you (or your spouse, if you’re married) is an “active participant” in a company retirement plan in 2010, IRA contributions for that year are nondeductible or only partially deductible if your AGI exceeds a specific dollar threshold.

(Figures for 2010 have not been announced yet, but the phaseout for 2009 begins at $166,000 of AGI for joint filers and $89,000 for single filers for 2009.) Otherwise, you will be able to deduct an IRA contribution equal to the lesser of 100% of your earned income for the year or an annual threshold ($5,000 or $6,000 if you will be age 50 or older as of Dec. 31, 2010; these amounts may be adjusted for inflation).

Assuming you’re age 50 or older, you can make an extra “catch-up contribution” to an IRA ($1,000 for 2009). The same contribution limits apply to Roth IRAs.

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