IRA Rules

Archive for February, 2009

401k Rollover Advice Avoiding The 20% IRS Penalty by Bill Losey, CFP.mp4

Question: Is an IRA distribution considered “investment income” as defined under Earned Income Tax Credit rules ?

To qualify for the earned income tax credit, your “investment income” must be below a certain amount. Is an IRA distribution considered to be part of this “investment income” ??
$ so fresh – you didn’t answer my specific question.
$so fresh – thanks for the new information.. you have now answered my question.
vb – thanks for your excellent and very helpful answer.

Answer: On 1040a, an IRA distribution is shown on line 11 *and* line in the agi on line 21.

In the 1040a instructions, the investment income worksheet specifically skips line 11.

However, the calculation of the EIC takes the agi into account, so a large amount of IRA money can lower the EIC (it would never raise it).

Retirement Planning : How Do IRA Distributions Work?