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I should have mentioned that I am totally disabled and have been receiving Social Security Disability Benefits as well as Long Term Disability Payments from my former employer since 1989. I do not contribute any monies to my former employers plan and have not contributed any monies since 1989 when I became elegible for LTD Benefits. The LTD Benefits have been taxable by both the Feds and the State. However I was notified by my emplyer that my LTD benefits will automatically terminate when I am 62 years of age in May 2006 and I will be forced to take early retirement and thus start receiving taxable retirement benefits. Does this in any way change my elegibility for my 2006 IRA contribution?

No. Long-term disability payments are reported as wages until you reach retirement age. Thus, they can be the basis for an IRA contribution.

This additional fact does change my original answer about being covered by a plan. You haven't been since 1990.

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