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Does taxable dividend income qualify you to have a Roth IRA
Old 04-23-2008, 08:43 PM   #1
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Does taxable dividend income qualify you to have a Roth IRA

My understanding is that I can't have a Roth IRA because I work overseas where I don't pay American taxes on my income although I'm a US citizen.

So when I saw these funds mentioning "taxable dividend income" (specifically I was looking at Vanguard Equity Income Fund Investor Shares (VEIPX)), it got me wondering whether having this taxable income wouldn't in turn allow me to have a Roth IRA. Would it, and if so, is that something that would be worth doing?


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Old 04-24-2008, 12:15 AM   #2
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I am not at all sure of the IRA rules regarding wages outside earned out side the US.

However, unearned income such as interest or dividends DOES NOT make one eligible for any type of IRA Roth or traditional

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Old 04-24-2008, 05:27 AM   #3
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When you work overseas you are entitled to an earned income exemption of $85700 - wages and salary for which you do not have to pay US income tax. This income is not eligible for ROTH contribution. Any amount you earn additional to this is eligible for ROTH.

As CLIFP pointed out, unearned income - interest, dividends, capital gains - is not eligible for ROTH or any other type of tax deferral.

Regards, Michael
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