Am I Eligible to Make a Roth IRA Contribution?

Thursday, July 02, 2015

By Beverly DeVeny and Jeffrey Levine
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This week’s Slott Report Mailbag examines Roth IRA contribution eligibility and how to avoid RMDs (required minimum distributions) by rolling a Roth employer plan to a Roth IRA. As always, we recommend that you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here.
 

As always, we recommend that you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here. – See more at: https://irahelp.com/slottreport/do-i-have-take-rmds-every-account-i-…
As always, we recommend that you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here. – See more at: https://irahelp.com/slottreport/do-i-have-take-rmds-every-account-i-…

1.

Ed,

I am retired and will have no earnings (wages) as far as I can tell for 2015. Is there anyway that I can still make a Roth contribution for 2015?

Thanks,

Gerry McCabe (Greensboro, NC)

Answer:
No. You need compensation (earned income) in order to make an IRA or a Roth IRA contribution. Pension income or Social Security are not considered compensation.
 

2.

Hi Ed and Company,

I am aware that there are no RMDs required for the owner of a Roth IRA at age 70 1/2. I am unclear as to whether there are RMDs required for Roth 403(b)s? If there were, would rolling the Roth 403(b) into a Roth IRA avoid the RMD requirements?

Thanks,

Greg Leong

Answer:
There are required distributions for employer Roth accounts such as a Roth 403(b). You can avoid those RMDs by transferring the Roth plan balance to a Roth IRA. You must be eligible to take a distribution from the plan, and you must be younger than age 70 ½ for the entire year in the year you do the transfer. If you are going to be age 70 ½ or older, you must take the RMD from the Roth 403(b) before you transfer the remaining balance to a Roth IRA.
 

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