We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Can annuity income inherited from late brother be used for a Roth IRA contribution?
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict
, this post may contain references to products from our partners. Here’s an explanation for
Editorial Integrity
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
How We Make Money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
Dear Tax Talk,
I have received an annuity from my brother which is considered income in respect of a decedent. This will be taxed as ordinary income when I withdraw it from the annuity. I am retired and receive my income solely from Social Security and a pension. When I receive this additional income, can I use it to contribute to a Roth IRA (within the annual limitations for my age) since this is taxed as ordinary income? Thank you. — Phil
VisitBritain/Getty Images
Dear Phil,
Unfortunately, the answer is no.
There are several criteria for contributing to a Roth IRA. One is that you must have taxable compensation which the IRS defines as amounts received for providing personal services. These include:
Wages
Salaries
Tips
Professional fees
Bonuses
Commissions
Self-employment income
Nontaxable combat pay
Military differential pay
Taxable alimony
Separate maintenance payments
Benefits of a Roth IRA
The Roth IRA is a wonderful way to let your contributions grow tax-free. While you cannot deduct your contributions when you make them, you receive the benefit of not being taxed when you take the money out if you follow the IRS regulations for “qualified distributions.”
Additionally, unlike traditional IRA accounts, you can contribute to these accounts regardless of your age, and you do not have to take required minimum distributions.
Another important criterion that must be met to contribute to these accounts is that your “modified adjusted gross income” in 2016 has to be less than:
$194,000 for married filing jointly or qualifying widow(er).
$132,000 for single, head of household, or married filing separately, and you did not live with your spouse at any time during the year.
$10,000 for married filing separately if you lived with your spouse at any time during the year.
For 2017, the Roth IRA income limits went up slightly (to $196,000 for married filing jointly or qualifying widow(er); $133,000 for single and head of household filers).
You have not disclosed your other income amounts, so I am unable to offer any solutions for you at this time. I suggest you consider meeting with a qualified tax professional to see if you are missing out on any tax planning opportunities.
Thanks for the great question and all the best to you.
RATE SEARCH: Stretch your retirement income with a CD ladder. Compare CD rates today.
Share