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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121185  
Subject: Re: Are IRA mandatory withdraws Earned Income? Date: 1/10/2014 6:11 PM
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Please don't laugh right away...give this about 10 seconds of thought first.

Time's up. [tee hee] Actually, this is far from the silliest twist I've ever seen. I give you points for effort at the least.

Maybe IRS has already ruled on this, or maybe its been mentioned on the board before.


Soon I'll have to make mandatory withdrawals from my Traditional IRA due to hitting age 70 1/2.

When I made my contributions into my Trad IRA, it was from Earned Income dollars.


Are you sure about that? My IRA contributions come from my bank account. I have no idea whether the specific dollars I'm sending are from earned income or raiding my Twinkie fund. Check out "fungible" if you don't know what it means. Money is fungible.

Thus, one could say that a portion of the money I begin to withdraw is just "Deferred Earned Income".

So, would I be allowed to claim that percentage of my mandatory withdrawal as "Earned Income", and be allowed to put it into a Roth IRA?
It makes sense to me that I would be allowed that option.


No. Earned income is specifically defined in the Code, and IRA distributions, no matter what logical contortions you run them through, are not included.

Phil
Rule Your Retirement Home Fool
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