Earned Income Definition for Roth IRA
I have a new client who has been receiving unemployment benefits for all of 2009. She has some money in a money market fund that she would like to use to contribute to a Roth IRA. The unemployment benefits are her only income so far in 2009. Will that allow her to make a contribution to a Roth IRA or is that not considered earned income?
Permalink Submitted by mk foss on Tue, 2009-10-06 17:26
Unemployment benefits are not earned income. Salary, SE earnings, alimony are examples of earned income.
Permalink Submitted by Allen Broyles on Tue, 2009-10-06 18:17
Thank you. I had my own thoughts but was wanting some confirmation.
Permalink Submitted by Alan Spross on Tue, 2009-10-06 19:36
If she has a traditional IRA or old employer plan, perhaps she should consider a partial conversion to a Roth IRA. She can then use the funds that she would have used for a regular Roth contribution to pay the taxes on the conversion. No earned income is necessary to convert to a Roth IRA, but the max income limit of 100,000 still applies for 2009.
Permalink Submitted by Janine Janine on Fri, 2009-10-09 01:00
What does SE earnings refer to?
Thank you.
Permalink Submitted by tomd37 on Fri, 2009-10-09 01:49
SE = Self employment