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New Member

Hello - I'm retired and recently sold ESPP shares in a qualifying disposition. The bargain element is income (1040 line 7). Turbotax says I can put that into an IRA.

However, that income is not "earned" per se.  Does the IRS allow that bargain element income to be put into an IRA? (I'm looking to put it into a Roth IRA, not looking for a deduction.)
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Level 6

Hello - I'm retired and recently sold ESPP shares in a qualifying disposition. The bargain element is income (1040 line 7). Turbotax says I can put that into an IRA.

The discount element in an ESPP disposition is reported on line 7 of form 1040 as Wages.

This is considered earned income. You "earned" the discount by working at the company which granted you the ESSP shares. And this income qualifies you for a contribution to a Traditional IRA (if you are younger than 70 1/2) or a Roth IRA.

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Level 6

Hello - I'm retired and recently sold ESPP shares in a qualifying disposition. The bargain element is income (1040 line 7). Turbotax says I can put that into an IRA.

The discount element in an ESPP disposition is reported on line 7 of form 1040 as Wages.

This is considered earned income. You "earned" the discount by working at the company which granted you the ESSP shares. And this income qualifies you for a contribution to a Traditional IRA (if you are younger than 70 1/2) or a Roth IRA.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

Highlighted
New Member

Hello - I'm retired and recently sold ESPP shares in a qualifying disposition. The bargain element is income (1040 line 7). Turbotax says I can put that into an IRA.

Wow.  That's good news!  Thank you.
Highlighted
Level 6

Hello - I'm retired and recently sold ESPP shares in a qualifying disposition. The bargain element is income (1040 line 7). Turbotax says I can put that into an IRA.

Hope this was helpful!
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"