IRA Rules

Posts Tagged ‘distribution’

IRA Provost – About Blackfoot Sky

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?

Question: Can one continue contributions to a Traditional IRA past age 70.5 while collecting the RMD at the same time?

I reached age 70-1/2 last year and will collect my first IRA Required Minimum Distribution (RMD) this year. This may be an odd question but can I still make a maximum tax free IRA contribution this year? For me this year, the max is $6,000. OR is it that once you start receiving RMDs past your 70-1/2 birthday, one CANNOT make any more IRA contributions for the rest of their lives?

Answer: Great question! First, recent legislation suspended RMDs for 2009.

Next, you cannot contribute to a traditional IRA for the year in which you turn age 70 1/2, or older. You can, however, contribute to a Roth IRA. Your contribution limit for 2008 is: 100% of earned income, or $6,000 (includes $1,000 catch-up amount), whichever is less.

Hope that helps.

Disclaimer. The information above is for general purposes only and is not be be construed as tax, legal, or specific advice for any individual. Please consult with your professional advisors before you make any decisions regarding your finances.

In Service 401k Distributions to Roth IRAs by Pete Mitchell