Hello, my understanding is that following Section 116 of the SECURE Act of 2019, excludable difficulty of care payments are treated as compensation for the purposes of determining IRA contribution limits. However, IRS Pub. 590-A does not talk about this as compensation and only mentions it under the nondeductible contributions section of the traditional IRAs chapter in relation to increasing the nondeductible IRA contribution limit. Roth IRAs are supposed to have the same rules as Traditional IRAs unless noted, so I assume this also applies to Roth IRAs.
Some tax professionals and IRS employees say that IRS Pub. 590-A makes it clear that this only applies to nondeductible contributions to traditional IRAs, not Roth IRAs. They say that Roth IRAs requires taxable compensation, and the difficulty of care payments section does not apply to Roth IRAs. This all sounds very counterintuitive.
I was hoping you could provide some clarity. Thank you!
