I have One Question related to IRA contribution

Forum|Forum|1 year ago
October 30, 2024
13 replies
80 views

I am 61 years old and currently receiving Long term disability compensation from my company’s insurance company. Each year, the insurance company sends me a W2 form on the taxable compensation payout shown in Box 1. Can I use it to contribute to either an IRA or a Roth IRA

I have looked up on Google that I can contribute to an IRA since taxable income. But some other websites state “Can not”. So I have conflicting information. So What is the correct information

BeckyLeeH

Employee Tax Expert

Everyone is eligible to make contributions to a traditional IRA, but a tax deduction for those contributions may not always be available.
The IRS restricts who can claim a tax deduction for contributions to traditional IRAs based on various factors, such as income and employer-sponsored retirement plans.
The IRS limits the amount you can deduct each year, and this amount is subject to change each tax year.
The IRA deduction is an above-the-line deduction, meaning you can take it regardless of whether you itemize your deductions or claim the Standard Deduction.

This link may help you determine if you are eligible for a tax deductible IRA contribution:
https://turbotax.intuit.com/tax-tips/investments-and-taxes/deductions-allowed-for-contributions-to-a-traditional-ira/L6yMopvkV?srsltid=AfmBOor8un5lzoMmspXA9wfu8Yd7rWuOw65wWCyHfCa46s8RQON0PttH

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wayneyeeAuthor

Level 2

I still do not have exact answer from the expert. Yes or No

mmaherTE

Level 2

Yes you can contribute to either a traditional IRA or a Roth IRA. Once you are 70 and 1/2 or older you can no longer contribute to a traditional IRA but you can still contribute to a Roth IRA. Here is a helpful link to the IRS page that explains this information.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits If you can't click on this link just copy it and paste it in your browser address bar.

Terri Lynn

Level 6

Hello, Wayneyee!

1. Can you contribute to a Traditional IRA or a Roth IRA, based on your long-term disability income reported on your W2 in Box 1?

In general, yes, however, you must also subtract any amounts listed in box 11 of the W2, from the box 1 amounts on your W2, to derive at the amount that is considered as earned income for IRA contribution purposes.

2. Is 62 the minimum retirement age?

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits only when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will be higher.
As of current regulations, you are not prohibited from contributing to an IRA based on your age; meaning you can continue to contribute to a traditional or Roth IRA regardless of how old you are, as long as you have earned income to do so.

For Additional Information on IRA's, please see the following:

Please feel free to reach backout with any additional questions or concerns you might have!

Have an amazing rest of your day!

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Please feel free to reach out with any additional questions and . thank you so much for attending! . Please have an amazing rest of your day!Terri H.. **Say "Thanks," by clicking the thumb icon at the bottom of the post.** Mark the post that answered your question by clicking on "Mark as Best Answer.”.

wayneyeeAuthor

Level 2

I can use my $57K long-term disability compensation income to contribute to my wife's IRA or Roth?

Thanks

Wayne

DoninGA

Level 15

@wayneyee wrote:

I can use my $57K long-term disability compensation income to contribute to my wife's IRA or Roth?

Thanks

Wayne

No. You must have compensation from working to contribute to an IRA. Disability income is not compensation from working.

Go to this IRS website for Publication 590-A and on page 7 Table 1.1 shows what type of compensation is allowed for contributions to an IRA - https://www.irs.gov/pub/irs-pdf/p590a.pdf#page=7