Is gross or net pay eligible for Roth IRA contribution?
Hello,
If a person earns $300 in W-2 gross income before Medicare, Medicaid, Federal and State income tax deductions and income tax withholding (i.e, $220 net pay after deductions and withholding), can they contribute the full $300 into a Roth IRA for that year?
Thank you!
Bill Briner
Permalink Submitted by Alan - IRA critic on Fri, 2025-01-03 19:45
Yes. The taxable compensation is $300 and appears in Box 1 of the W-2, and the IRA contribution can be made up to that amount.
Permalink Submitted by Bill Briner on Sat, 2025-01-04 08:12
Thanks Alan!