if I only have misc income (post doc grant): can I still contribute

[Guest postdoc]

I am a post-doc which means that although I get a paycheck and have to pay taxes like the rest of the world, I don't get a W-2 at the end of the year. Instead, we get a Misc. Income from Government Grants form reporting our income. I am wondering whether I can still contribute to my roth with this type of income? If it makes a difference, we get a form called 1099-G at the end of the year instead of a W-2

[John G]

You description is not very clear. On the one hand you refer to a "paycheck" and on the other you talk about grants. If you have a paycheck that includes taxable income and has withholding for SSN and federal income tax, I think you are covered. However, if you are getting a stipend you may not be covered.

As a former holder of a governement fellowship that helped to pay for grad school, I know that what is taxable and what might be considered earned income can get very obscure. You may want to talk to the dept or central bursar to get some clarification.

[Guest postdoc]

that's the problem... we don't get federal withholding... we pay estimated taxes. So, I don't know if that means it isn't earned income. It seems a bit crazy that they can tax us (and yes, the same happened through grad school and that was NOT considered earned income) but we cannot contribute to a retirement account.

I just don't know how to figure out whether it is "earned" or not.

[Lame Duck]

Publication 560 defines earned income as net earnings from self employment. Code Section 1402(a) defines net earnings from self employment as the gross earnings derived by an individual from any trade or business carried on by such individual, less the deductions ... which are attributable to such trade or business. Whether you can make a contribution based on the income you've earned would depend on whether you consider it to be income from a trade or business. How do you declare the income when you file your tax return? Do you file a Schedule C on the income?

[E as in ERISA]

My general rule of thumb is that if you don't pay FICA or SE tax on it, then it's probably not eligible to be used as the basis for retirement plan/IRA contributions.

[mbozek]

Q. what do you do for the money your receive? Are you a teaching fellow, researcher or student who has a govt grant to study a topic. IRS publication 590 P.8 states that Scholarship and fellowship income is is compensation for IRA purposes only if shown on box 1 of W-2. Pub 590 is available at www.irs.gov.