Contributing Pension Income to an IRA

Forum|Forum|5 years ago
March 18, 2021
13 replies
53 views

I filed my taxes with turbo tax and followed the prompts that said I could take part of my pension income and contribute to an IRA. I did this but have now been told by my investment advisor that my IRA contribution will not be deductible. Is this section on turbo tax not accurate?

Thanks.

macuser_22

Alumni - Champ

@khuber wrote:

I filed my taxes with turbo tax and followed the prompts that said I could take part of my pension income and contribute to an IRA. I did this but have now been told by my investment advisor that my IRA contribution will not be deductible. Is this section on turbo tax not accurate?

Thanks.

Pension income is not eligible to fund an IRA.

The maximum IRA contributions for 2020 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deductible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2020_publink1000230355

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

khuberAuthor

Level 2

Thank you, I agree I filed in error for sure. TurboTax needs to fix the prompts that lead me to believe contributing to an IRA was allowed and deductible even though all my income was from a pension.

macuser_22

Alumni - Champ

@khuber wrote:

Thank you, I agree I filed in error for sure. TurboTax needs to fix the prompts that lead me to believe contributing to an IRA was allowed and deductible even though all my income was from a pension.

I do not know of anything in TurboTax that would lead you to think that. What do you mean?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**