Limit if Covered by Employer Plan: IRA Contributions and Transfers (2025 IRS Guide)

This guide covers “Limit if Covered by Employer Plan” within ira contributions and transfers. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs), published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

Generally, you can deduct the lesser of:

• The contributions to your traditional IRA for the year, or

• The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed.

.You may be able to claim a credit for contributions to your traditional IRA. For more information, see chapter 3..

Limit if Covered by Employer Plan

As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Your deduction is also affected by how much income you had and by your filing status. Your deduction may also be affected by social security benefits you received.

Reduced or no deduction.

If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status.

Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status.

To determine if your deduction is subject to the phaseout, you must determine your modified AGI and your filing status, as explained later under Deduction Phaseout. Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies.

Social Security Recipients

Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply.

• You received social security benefits.

• You received taxable compensation.

• Contributions were made to your traditional IRA.

• You or your spouse was covered by an employer retirement plan.

Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Appendix B includes an example with filled-in worksheets to assist you.

Table 1-2. Effect of Modified AGI¹ on Deduction if You Are Covered by a Retirement Plan at Work

• If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction.

• ¹ Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI), earlier.
  ² If you didn’t live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status).

Table 1-3. Effect of Modified AGI¹ on Deduction if You Aren’t Covered by a Retirement Plan at Work

• If you aren’t covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction.

• ¹ Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI), earlier.
  ² You are entitled to the full deduction if you didn’t live with your spouse at any time during the year.

Deduction Phaseout

The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan.

Covered by a retirement plan.

If you are covered by an employer retirement plan and you didn’t receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2.

If your spouse is covered.

If you aren’t covered by an employer retirement plan, but your spouse is, and you didn’t receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3.

Filing status.

Your filing status depends primarily on your marital status. For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying surviving spouse, or married filing separately. If you need more information on filing status, see Pub. 501, Dependents, Standard Deduction, and Filing Information.

Lived apart from spouse.

If you didn’t live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single.

Modified AGI.

You can use Worksheet 1-1 to figure your modified AGI. If you made contributions to your IRA for 2025 and received a distribution from your IRA in 2025, see Both contributions for 2025 and distributions in 2025, later.

.Don’t assume that your modified AGI is the same as your compensation. Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. .

Form 1040 or 1040-SR.

If you file Form 1040 or 1040-SR, refigure the amount on line 11a, the “adjusted gross income” line, without taking into account any of the following amounts.

• IRA deduction.

• Student loan interest deduction.

• Foreign earned income exclusion.

• Foreign housing exclusion or deduction.

• Exclusion of qualified savings bond interest shown on Form 8815.

• Exclusion of employer-provided adoption benefits shown on Form 8839.

This is your modified AGI.

Form 1040-NR.

If you file Form 1040-NR, refigure the amount on line 11a, the “adjusted gross income” line, without taking into account any of the following amounts.

• IRA deduction.

• Student loan interest deduction.

• Exclusion of qualified savings bond interest shown on Form 8815.

• Exclusion of employer-provided adoption benefits shown on Form 8839.

This is your modified AGI.

Income from IRA distributions.

If you received distributions in 2025 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, your distributions are fully taxable and are included in your modified AGI. See Pub. 590-B for more information on distributions.

Both contributions for 2025 and distributions in 2025.

If all three of the following apply, any IRA distributions you received in 2025 may be partly tax free and partly taxable.

• You received distributions in 2025 from one or more traditional IRAs.

• You made contributions to a traditional IRA for 2025.

• Some of those contributions may be nondeductible contributions. (See Nondeductible Contributions and Worksheet 1-2, later.)

If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. To do this, you can use Worksheet 1-1 in Pub. 590-B.

If at least one of the above doesn’t apply, figure your modified AGI using Worksheet 1-1.

How To Figure Your Reduced IRA Deduction

If you or your spouse is covered by an employer retirement plan and you didn’t receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. The Instructions for Form 1040 include a similar worksheet that you can use instead of the worksheet in this publication.

If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients, earlier.

Note:

If you were married and both you and your spouse contributed to an IRA, figure your deduction and your spouse's deduction separately.

Worksheet 1-1. Figuring Your Modified AGI

• Use this worksheet to figure your modified AGI for traditional IRA purposes.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs): Traditional IRAs — How Much Can You Deduct? — Limit if Covered by Employer Plan — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.