Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My unmarried client has earned income which is tax-exempt by a special federal rule.  If he has no other earnings, is he eligible to make a traditional IRA or Roth IRA contribution?

Answer:  No.

A taxpayer must have earned income to be eligible to contribute to his own IRA or Roth IRA.  Code Sections 408, 179 and 1402, read together, make the point that the earned income must be included in the gross income of the taxpayer to count as eligible for an IRA or Roth contribution.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.