Slott Report Mailbag: If I Terminate My Employment in January 2013, Can I Contribute to My Roth IRA?

Thursday, December 06, 2012

By Joe Cicchinelli, IRA Technical Expert

Follow Me on Twitter: @JoeCiccEdSlott

This week’s Slott Report Mailbag looks at Roth contributions and the prerequisites necessary to make a contribution. We also answer a question on investing inherited IRA money in an IRA annuity. As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Find one in your area at this link.

1.

If I terminate my employment in January of 2013, can I contribute to my Roth IRA?

Answer:
You can contribute to a Roth IRA next year if you have compensation from employment. If you have no compensation of your own but you are married and your spouse has compensation, you can make a spousal Roth IRA contribution using his/her compensation. In either case, your total income cannot exceed $178,000 for 2013 to make a full Roth IRA contribution.

2.

I converted an IRA to a Roth IRA in December of 2010. I have to pay the final taxes on it this tax year.

I had wages of $23,000.00 this year and plan to make a $6,000.00 contribution this year into my Roth IRA. I am retired and this could be the last year that I have wages. I have heard that other income qualifies for contributions to a Roth IRA.

Is this income stock dividends? Is there any other income that qualifies as income, so I can make a contribution to my Roth IRA in future years?

Any help would be greatly appreciated.

Thanks,
Chuck Hawkins

Answer:
You need compensation to make a Roth IRA contribution. Compensation includes wages, tips, and earned income from self-employment. Stock dividends are not considered compensation.

3.

Dear Ed,

I have run across your articles on the web. I have a question that you may have answered previously. My wife is 57 and is the recipient of a beneficiary IRA worth about $100K from her step-mother, who was already taking distributions. My wife is now taking required minimum distributions (RMDs) each year on her life expectancy. We moved it from her step-mom’s custodian to our investment advisor’s firm and retitled it properly.

It is currently in various mutual funds. Can she invest this into an annuity for purposes of gaining a fixed income and reducing stock market risk?

Many thanks for your advice and commentary,

Best regards,
Andy Field

Answer:
Yes. She can invest the inherited IRA money in an IRA annuity, which is sometimes called a qualified annuity. She will have to continue taking death distributions from that inherited IRA annuity.
 

Receive Ed Slott and Company Articles Straight to Your Inbox!
Enter your email address:

Delivered by FeedBurner

 

Posted in: , , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.