I get monthly checks from the company I retired from. They are called non-qualified benefits disbursement - maybe it is deferred compensation payout. They send me two 2023 W2's for it. I enter these and there is about $40k that shows up as earned income in Turbotax Deluxe desktop 2023. The Turbotax says I am ineligible for IRA contribution because my earned income is zero - even though there is a $40k value in the earned income line. It asks me my total traditional IRA amount (??) and then says I have to pay penalty - I cannot get past this step. Is this because it sees my non-qualified disbursement as non-applicable to earned income requirements for IRA contribution? I also have dividend, soc sec and 1099R income which I know does not count towards IRA eligibility earned income.
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Income from a nonqualified deferred compensation plan will not support an IRA contribution. The IRS states that income on a W-2 that will support an IRA contribution is the amount in box 1 minus the amount in box 11.
Thank you, I agree.
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