Ask Terry Questions Roth IRA contribution — what’s earned income?

Roth IRA contribution — what’s earned income?

By Terry Savage on July 16, 2018 | Financial Planning / Retirement

I am the owner of IL partnership with my children.
My income comes from property rentals, no salaries are paid but withdrawals are made of rental income. Can I and my partners contribute that income to a roth ira?

Terry Says

It depends on how the “distribution” is characterized. If it is a salary, then it is earned income. If it is a “return on investment” then it is NOT earned income — and thus you cannot make a ROTH IRA contribution based on that income. Check on how your accountants characterize that withdrawal.

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