Is buyout money considered earned income?

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mbres60
Posts: 564
Joined: Tue Jul 03, 2007 1:47 pm

Is buyout money considered earned income?

Postby mbres60 » Thu Dec 27, 2012 2:22 pm

I may be receiving a buyout from work in 2013 and was wondering if the money I receive is considered earned income for Roth IRA purposes. They would be taking out taxes but not putting money into 401k or towards pension. Anyone know if I could count this money to help towards having enough earned income for my Roth? Thanks.

Sidney
Posts: 6229
Joined: Thu Mar 08, 2007 6:06 pm

Re: Is buyout money considered earned income?

Postby Sidney » Thu Dec 27, 2012 2:27 pm

Well, the term is "compensation" not earned income. The best answer is to ask your employer how the W2 will be coded. If it is coded as wages like a normal W2 then it will likely be deemed compensation for the purposes of IRA qualification.
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