UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75540  
Subject: Re: are mandatory IRA withdraws "Earned Inc Date: 1/11/2014 1:23 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
That the contribution to the IRA was originally from compensation, and that the Federal (and usually state) income tax on this contribution amount has been deferred until the amounts are withdrawn, does not defer the 'compensation' character of the original contribution amount. Were this not so, individuals could recontribute mandatory minimum distributions such that the IRA would be perpetual and the required distribution would be meaningless.

Perhaps a better example of this is deferred compensation. The argument you raise is best suited to this kind of compensation, as it was indeed 'earned' income subject to employment tax when it was deferred....so when withdrawn in later years (presumably during retirement) and taxed as ordinary income, shouldn't this be eligible for an IRA contribution? The IRS says no. Not exactly sure why, except perhaps that the contribution one makes to their IRA or retirement plan must be from income they or their spouse earned that year, not income earned in previous years.

BruceM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Value Hounds

Kate Spade's Wild Ride
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement