topic Yes, the vesting creates earned income in the year that i... in Retirement tax questions

Does income from vested “Restricted Stock Units” qualify as earned income and thus allow me to contribute to a Roth IRA?

Greenblue — Sat, 01 Jun 2019 00:02:38 GMT

I am retired but I still get vested “restricted stock units” every year. When they vest, the company withholds payroll taxes and I get a W-2. Would this qualify as earned compensation and allow me to contribute to a Roth IRA? My other earnings are from dividends, interest and capital gains which would do not qualify as earned income.

When I read IRS Bulletin 590-A, it says anything on a W-2, box 1 is earned income and then later says that deferred compensation is excluded from the definition of earned income. I can not find the IRS definition of deferred compensation as used in Bulletin 590-A.

Yes, the vesting creates earned income in the year that i...

TomYoung — Sat, 01 Jun 2019 00:02:40 GMT

Yes, the vesting creates earned income in the year that it's reported on a W2. RSU's are not deferred income, they are employer stock incentive programs and, depending on circumstances, may not have vested meaning you'd have never received the compensation.

Tom Young

Page 6 of 2015 IRS Pub 590-A indicates that the amount on...

dmertz — Sat, 01 Jun 2019 00:02:43 GMT

Page 6 of 2015 IRS Pub 590-A indicates that the amount on a W-2 that the IRS considers to be eligible compensation to support an IRA contribution is the amount in box 1 reduced by the amount in box 11.