IRA Eligibility


B

BRH

I will be retiring from my job in early December, and will start
receiving a pension in February 2008. I have always contributed to an
IRA and would like to know whether I'd still be eligible to do so in
2008. Note, that I don't plan on earning any wages at all after retirement.

That said, I may end up getting my check for accumulated unused vacation
time in early 2008 rather than in late 2007. If that's the case, and if
wage income is required to contribute to an IRA, would that be
considered wage income in 2008?

Thanks!
 
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M

Mark Bole

BRH said:
I will be retiring from my job in early December, and will start
receiving a pension in February 2008. I have always contributed to an
IRA and would like to know whether I'd still be eligible to do so in
2008. Note, that I don't plan on earning any wages at all after
retirement.

That said, I may end up getting my check for accumulated unused vacation
time in early 2008 rather than in late 2007. If that's the case, and if
wage income is required to contribute to an IRA, would that be
considered wage income in 2008?
If the vacation pay is reported as wage income on a W-2 for 2008, then
yes. You may also be eligible to contribute if you have a spouse with
earned income.

As a retiree with pension income, it *might* make sense to contribute to
a Roth IRA if you are eligible; I don't see any good reason to put money
in to your Traditional IRA at this point. In fact, you should be
planning how you will eventually get the money out (if not, required
minimum distributions will make the choice for you beginning around age
70.5).

-Mark Bole
 
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J

joetaxpayer

Mark said:
As a retiree with pension income, it *might* make sense to contribute to
a Roth IRA if you are eligible; I don't see any good reason to put money
in to your Traditional IRA at this point. In fact, you should be
planning how you will eventually get the money out (if not, required
minimum distributions will make the choice for you beginning around age
70.5).

-Mark Bole
And a good time for the OP to consider, based on tax bracket at
retirement, whether the conversion to Roth of some IRA money is
appropriate for him. http://fairmark.com/refrence/ is now loaded with
the 2008 rates, and the chart will make it easy to see if the conversion
just 'fills up' his 2008 bracket, or would put him into the next.
JOE
 

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