Am I Eligible to Make a Roth IRA Contribution?

Thursday, July 02, 2015

By Beverly DeVeny and Jeffrey Levine
Follow Us on Twitter: @theslottreport

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.
 

Receive expert IRA and tax planning articles straight to your email. Subscribe here.

Posted in: , , , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.