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I just finished reading the article Roth IRA - Part 1 by Roy Lewis. I have just a couple questions, both having to do with earned income. The first involves severance pay and the second bonuses paid after severance.

Hypothetical situation. Employee is offered a voluntary severance package late in 1999. He accepts the package and elects to take severance pay in a lump sum the following January 2000. Also, since he worked the majority of 1999, he will be eligible to recieve any performance bonuses paid out in April 2000 for performance during the 1999 work year. He then decides to take some time off and travel. He does not intend to work again until the year 2001.

Question. Will he be eligbile to contribute anything to a Roth IRA in the year 2000? Although he will not be working, he will recieve income 2 times in the year 2000. The article did not specifically mention anything about severance pay, but I'm guessing a big fat NO on that one. Still, it would be nice to be sure. The article does specifically mention bonuses and goes on to state that it is considered earned income, but I'm not sure that the author meant it to apply to this situation (the situation being that the individual will not be working at all during the year the contribution is made). Again, it would be nice to be sure.

A great big THANK YOU to anyone who could help. An even BIGGER THANK YOU to anyone who could point me to some type of official documentation that could confirm one way or the other. Lastly, an average size thank you for even reading this far. I tend to be long winded sometimes. Sorry.

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