You Don’t Need Income to Make an IRA Contribution

Contrary to what you may think, you don’t need to earn income to be able to make contributions to an IRA. You’re probably familiar with spousal contributions, but did you know that you can make contributions from when you exercise non-qualified stock options? The taxable portion is considered taxable income for IRA purposes. If you receive alimony, that too is taxable as ordinary income and is eligible for IRA contribution. Some scholarships and fellowships may be considered taxable income, depending on reported on the W-2 form. This last one can be valuable to young savers, such as your children or grandchildren. If you have a child (or grandchild) in graduate school living on a fellowship or scholarship money, you may want to see if that money is considered taxable income. If it is, you should talk to them about either setting up an IRA or, if they already have one, making a contribution. This could go a long way towards getting them on the right track towards retirement early on. If you have questions have whether or not something is considered taxable income or whether you are in a position to make a contribution to your IRA, you should speak with a certified financial planner.


Is Your Spouse Still Working? Have Them Make a Contribution!

Did you know that if you retire, but your spouse continues to work, that you can still make a spousal contribution to an IRA? And no, you do not need to open another account to start making such contributions. So long as your spouse earns enough income to cover the 2019 contribution limits for the both of you, a spousal contribution to your own Roth IRA can be made. It doesn’t matter who the money comes from–it could be written by you or your spouse–you just need to file a joint federal tax return and your spouse needs to meet the required income limits (along with any other requirements). Spousal contributions can be a great way to build up your IRA if you retire earlier than your spouse or if you are a stay-at-home parent. If you have questions about spousal contributions you should speak with either a certified financial planner or with the custodian of the account which you plan to contribute to.