Severance Pay - Retirement Plan Options?

[Guest ctlyn]

I am not sure where to post my question, but it is:

My employment ended with a company and I received 15 months worth of severance pay, which is great. However, when my employment ended, all company contributions to the pension plan and to my 401K ended as well as my contributions to my 401K. Can I pay a percentage of my severance pay into some sort of retirement plan I establish, i.e., an Individual(K) plan and something similar?

[david rigby]

Probaby not, but there are differing opinions. Use the Search feature to find the many prior discussion threads on this topic. Suggested key word: "severance pay".

[mbozek]

You cannot use the severance pay as compensation for any plan you establish because only your net earnings from self employment can be contributed to an HR-10 plan or SEP and the severance pay is compensation from your former er. See IRS pub 560. You may be able to contribute to an an IRA for any year in which you receive severance pay and participated in your employers plan if you meet the income threshold, e.g. AGI <50k for a single person. See IRS pub 590, available at irs.gov for details.