A:

For the purposes of contributing to an IRA, compensation (i.e. earned income) does not include income from a pension, an annuity or Social Security. Generally speaking, you must have earned the income by performing services (i.e. work) or received it as alimony and/or a separate maintenance for it to be considered compensation for the purposes of contributing to an IRA.



This question was answered by Denise Appleby
(
Contact Denise)



RELATED FAQS

  1. How much will an employer generally contribute to a 401(a) plan?

    Find out how much employers may contribute to an employee's 401(a) retirement plan and why this amount can vary so widely ...
  2. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...
  3. Is Social Security Income a perpetuity?

    Find out why Social Security income is not classified as a perpetuity, including what constitutes a perpetuity and the basics ...
  4. What types of investments are allowed in a provident fund?

    Read about the types of investments allowed in various provident funds around the world, including the Indian, Malaysian ...
RELATED TERMS
  1. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  2. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  3. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  4. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  5. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  6. Medigap

    Also called Medicare Supplement Insurance, Medigap is health ...

You May Also Like

Related Articles
  1. Retirement

    How to Battle Inflation During Retirement

  2. Retirement

    Does it Make Sense to Have an MLP in ...

  3. Retirement

    Top Tips for Rebalancing 401(k) Assets

  4. Professionals

    Why Millionaires are Running Scared

  5. Professionals

    Few Target-Date Managers Invest in Their ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!