April 5, 2009
Look Closely at Your IRA Contribution
An IRA contribution to a Traditional IRA is an excellent way to get a high return on your investment. There are certain requirements that you must meet before you qualify for this type of account. First and foremost, you must be under the age of 70 ½ during the entire year that you wish to make your contributions and you must be earning some type of income from doing from personal services. IRS Revenue Procedure 91-18 specifically outlines what type of work fits this category. Basically it says that any amount shown in the “Wages, tips, other compensation” box on Form W-2 minus any amount shown in the “Nonqualified Plans” box will be considered eligible for Traditional IRA contributions. Remember, though, that investment income does not qualify as earned income when you are making contributions to your Traditional IRA.