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Author: MicroDrew Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Roth IRA contributions Date: 8/12/1997 5:52 AM
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Howdy tax code enthusiasts (and non-enthusiasts).

I'm trying to get a grip on the new IRA provisions. I have one question that I haven't been able to answer from the posts on this board and the various web references.

Currently I can't contribute to an IRA because my earned income is all foreign and exempted. But my foreign employer doesn't have any kind of pension program (at least not one that I am eligible for) and I would like to open an IRA as soon as possible.

Am I out of luck with Roth IRAs too, as long as my earned income is entirely exempt? I'd like to move some investment income into an IRA if possible, and since I've already paid tax on the income one might logically conclude that it would be eligible as a non-deductible IRA contribution (up to $2000 - at least that part is crystal clear).


An unrelieved taxpayer,

Drew
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195 of 121061
Subject: Re: Roth IRA contributions Date: 8/20/1997 9:54 AM
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<<Am I out of luck with Roth IRAs too, as long as my earned income is entirely exempt? I'd like to move some investment income into an IRA if possible, and since I've already paid tax on the income one might logically conclude that it would be eligible as a non-deductible IRA contribution (up to $2000 - at least that part is crystal clear).>>

As you note, foreign earned income, eligible for the foreign earned income exclusion is not defined as "compensation" for IRA purposes. And the Roth IRA uses the same definition for compensation as the "normal" IRA. That being the case, it would appear to me that you would NOT qualify for the Roth IRA with your exempt foreign earned income.

Sorry about that...but think of all of the tax dollars that you are saving right now. That may take some of the sting out of this issue for you.

TMF Taxes
Roy Lewis



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