IRA Eligibility – Earned Income

Does income earned from being a trustee qualify as “earned income” for purposes of funding an IRA?

Thank you



If you are in the business of being a trustee and file a Sch C and SE, it definitely qualifies. If you are not in the business  and report trustee fees on line 21 of Form 1040, the general consensus is that even though you pay income tax on the fees and therefore they are taxable compensation, it is not SE income, and you are not in that business and cannot support an IRA contribution. The IRS in Pub 590 A neither lists trustee or executor fees as eligible or not eligible, so you will probably not get a consistent IRS response if you make a contribution using line 21 income items. Alimony qualifies but represents an exception from the SE tax requirement.



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