1099-R with code 3 in box 7 for a disability pension at an age younger than the minimum work retirement age......

[richepper]

1099-R with code 3 in box 7 for a disability pension at an age younger than the minimum work retirement age...... since these distributions are taxed as wages until you reach the minimum retirement age and reported on line 7 of the 1040, this would be considered earned income and if that total is above $5,500 (or $6,500 if over 50) you could fund an ira for that tax year to the maximum amount?

[PhyllisG · Accepted solution]

Because your employer's disability retirement plan is considered earned income until you reach minimum retirement age, you should be able to fund an Individual Retirement Account (IRA).  However, you must stay below the IRA contribution limits.

One of the IRA requirements is that you have to have earned income. Once you reach retirement age, the amount will be taxed as a pension or annuity, and you will no longer be able to contribute to an IRA.