Roth IRA Contribution Question
Situation:
I have a client (actually a friend) who is retired. He is over age 70.5. He tells me he is taking his RMD’s and putting them into a Roth IRA.
I have not seen any of his paperwork as of this time.
I know that there is no age limit to contribute to a Roth. Pub 590A reads that one of the requirements for making a contribution to a Roth IRA is having Earned Income or Compensation (typically W-2 income). My read and interpretation is that Passive Income is not Roth IRA eligible for contribution purposes, nor is Social Security income.
Assuming he has no Earned Income, can his RMD’s be contributed to a Roth?
Thank you.
Permalink Submitted by William Tuttle on Fri, 2017-06-16 20:22
You are correct compensation is required. See IRS Publication 590-A, top of page 5, What Is Compensation? and Table 1-1 Compensation for Purposes of an IRA. You are correct, passive income and SS do not qualify. However, if the spouse has compensation >= the amount necessary for both spouse’s contributions, then he may make a spousal contribution.