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Roth and IRA contributions without earned income?

If I retired in February 2008 and will only gross $5000 total income for the year, can I contribute $6000 to a Roth IRA and $5000 to a traditional IRA for 2008? Does interest and dividend income have any effect on what I can contribute? Do I understand the rules correctly that I cannot make contributions unless I am employed?

DTW

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Reply to
sailor1x
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No, but that has nothing to do with your earnings. You can

*never* contribute $6000 to a Roth and $5000 to a traditional IRA in a single year. The limit for contributions to IRAs - Roth and Traditional - is a *combined* limit. If you're over 50, you can contribute a total of $6000 to your IRAs. That may be $4000 in the Roth and $2000 in the Traditional - or whatever other split you like. But the total cannot be more than $6000. (see more details about this posted about a week ago on the newsgroup. Or see the "How Much Can Be Contributed" section under Roth IRAs in IRS pub 590. For the 2007 version, it's the bottom right of page 60)

You do not have to be employed at the time you make the contributions. But you do have to have *earned* income in the year for which the contributions apply. So if your earnings for 2008 are $5000, you may contribute $5000. (exception for spouses of folks with earnings). And no, interest, dividends, capital gains are not considered earned income for this.

Reply to
BreadWithSpam

?? I trust you are 50 or older. Your 2008 deposit limit is $6000 or earned income, whichever is LESS. So for you, $5000 is it. The IRA limit is one limit for both types as a total, noone can deposit $6000 + $6000 as an individual without penalties for overdepositing. JOE

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-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
joetaxpayer

But interest, dividends, and capital gains can effect your eligibility to make a contribution.

-Will

william dot trice at ngc dot com

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Will Trice

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