My husband is an electronic engineer who has worked for six different companies in 12 years -- not long enough to gain vested pension benefits. Can he put money into an IRA between jobs? What percentage? Could he put money into an IRA after going to work for a new company, or would the IRa have to be closed? Where can I get guidance on tax and IRA laws? A.H.
Your husband may set up and contribute to his own individual retirement account (IRA) only if during the year he does not actively participate in a qualified pension or profit-sharing plan where he works -- even for one day in the year. If he has no such plan, he is entitle to set aside retirement funds totaling up to $1,500 for one year, or $1,750 if he opens a spousal IRA.
If he should start an IRA because he works for an employer without a pension or profit-sharing plan, he need not close it out if he goes to work for another employer with a pension or profit-sharing plan in another year, but he cannot contribute to the IRA while working as an active participant in a group pension plan. He may, if the company plan permits, not participate. He could, under those conditions, continue to contribute to the IRA.
Although vesting of pension rights is improved under present laws, someone who moves as often as your husband might prefer to opt out of an employer's plan and continue his own IRA. That way he can carry the benefits with him. For detailed information, request Internal Revenue Service Publication 590 -- free from a local IRS office.