Slightly complicated IRA contribution question

[roger r]

I retired in late 2007 and didn't work any days past the end of that year. My severance pay check was paid in early 2008 and reported on my 2008 W-2 form. My company wouldn't allow any contributions to my 401k for 2008. Can I make a contribution to either a Roth or traditional IRA for 2008? Help is appreciated! Roger

 

[FIREd]

It depends in part on how large your severance pay was. But since you had "earned income" in 2008 and were ineligible to contribute to a workplace retirement plan, you should be able to contribute money either to a roth IRA or a traditional IRA. But beware that you cannot contribute more than what you received in severance pay and that there are income limits (so if your severance pay was quite large, you may not qualify to make contributions to one or both type of IRAs).