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? Re Roth IRA Eligibility and Disbility Income


Guest twokatmew

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Guest twokatmew

Hello,

I have been paying into my 403b account through my employer for many years

now. (They match 200%, so it's a great deal.) This year I opened a Roth

IRA in addition to my 403b deposits. However, a surgery gone bad landed me

on disability (insurance provided through my employer) part-way into 2005.

I expected to go back to work this calendar year, but I now find it isn't going to

happen. Further, my doctor is unsure if I will go back to work in 2006.

Because my employer pays the premiums on this disability policy, I pay

federal and state income tax on the disability income, but I do not pay

medicare or social security tax.

My question is that if it turns out that I remain on disability through

2006, will I be ineligible to make deposits to my Roth IRA in 2006?

Further, does it make a difference if I start receiving social security

disability? (My employer's disability policy requires that I apply for

SSDI, which I did, but I was denied and have an appeal pending. As my

employer's policy is coordinated, any income I ultimately receive from SSDI

will reduce what I receive from my employer's insurance.)

One other question.... Let's assume I am not eligible to make deposits to

my Roth IRA while on disability. If I make desposits to my Roth IRA in 2006

expecting to return to work before the end of the year, and I end up not

working in 2006, what happens? I know I would have to retract those

deposits, but is there any penalty for doing so? Or does that depend on the

investment company? (My account is with Vanguard.)

And finally, can anyone point me to a source for all the Roth IRA rules and regulations?

Thanks!

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One source IRS publication 590 at www.irs.gov

You can make the Roth IRA contribution as long as you receive compensation for the year…contribution limit the lesser of 100 percent of compensation or $4,000--$4,500 if you are at least age 50 by year-end. 590 defines compensation for purposes of making an IRA contribution

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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