You need earned income to contribute ROTH

柠檬椰子汁 · 2024-02-13 12:06:32Z

You need earned income to contribute ROTH简介

来源: 柠檬椰子汁于 2024-02-13 12:06:32 [档案] [博客] [旧帖] [给我悄悄话] 本文已被阅读：次 (1101 bytes)

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回答: 退休后，还可以存roth ira 吗，假如收入在limit之内由凊荷于 2024-02-13 11:55:57

401K withdrawal are considered unearned income, similiar to interests earned from bank deposit.

It is not earned income that is needed for ROTH.

Of course you can easily work 4 weeks to earn income up to $6500 to contribute to ROTH, the problem is that you will pay social security tax on it, in additional to income tax. Let's say you give your child $6500 to "hire" you as babysitter, that's earned income. But your child as employer has to pay 7.65% social security tax for you, and you have to pay the other 7.65%. So you and your child has to pay 6500*15.3%=$994 social security tax in order to get $6500 earned income reported as eligible for ROTH contribution. Actually I think the employer's share of 7.65% doesn't count as your earned income, anyway, you get the idea.

However, if you only earn $6500 well below the $22850 limit, your social security won't be impacted. Only earned income above that limit will result in reduction in your social security payment.