Can I contribute to a roth 401 k ?

[Slim11]

Ok, so say I am retired, and colecting a pension. The pension is taxable, can I contribute to a roth 401k? I have some money in accounts and this may be a good way to put this money away long term. Not sure if I will go thos way or not, but it may be beneficial.

 

[Kings over Queens]

I'm not aware of any age limitation that would prevent you from funding a roth IRA, only income. If memory serves me correct, it's above $200,000, but the google machine can help with the specifics.

 

[pjigar]

FWIW all 401K plans are employer sponsored. Typically if you are not a full-time or more than part-time employee then you are not eligible for contributions. Check your plan document.

 

[Alan]

FWIW all 401K plans are employer sponsored. Typically if you are not a full-time or more than part-time employee then you are not eligible for contributions. Check your plan document.

That was my situation. Even though I was collecting a company pension I couldn’t contribute to a 401k, Roth or regular once I had stopped working.

 

[retire48in2018]

Income must be subject to social security taxes to be eligible for Roth

 

[Bruno]

I am retired but because my wife is still working i have been able to fund my Roth. Depending on your tax bracket the better plan might be to do roth conversions.

 

[Kork13]

A pension is considered "unearned" income, although still taxable (just like investment income is considered "unearned"). To contribute to a 401k, you must be employed (or self-employed) & the business must sponsor the 401k plan. To contribute to an IRA, you (or your spouse) must have EARNED income equal to or greater than the IRA contribution.

If you only have unearned income (pension, investments, real estate, royalties, etc.), unfortunately you can't contribute new money to an IRA. However, you are able to convert traditional IRAs/401ks to a Roth IRA, if desired.

 

[Out-to-Lunch]

Retire48 already said it, but let me phrase it another way: A pension is NOT considered earned income. You can only contribute to a Roth if you (or your spouse) has earned income.

Edited to add: Kork beat me to it by a few minutes!

 

[bloom2708]

https://www.irs.gov/credits-deducti...come-and-earned-income-tax-credit-eitc-tables

Unless you work part time in a W-2 or self employed job where you report income, a pension is not earned income.

 

[Slim11]

Ok, thanks. Wasn't sure. A roth conversion dosen't make sense at this time. I may make small withdrawals, up to the max at my tax level and do a small amount each year to a roth. To do it all is not worth it. So the money will sit in the 457 for now. Unless I get a part time job. This may or may not happen.

 

[Slim11]

Income must be subject to social security taxes to be eligible for Roth

This isnt true, as for my job I never paid SS taxes. I couldn't get a roth 401k as I was over the income limit, if I made less I would have been able to. Now they have the roth IRAs that are diffrent I believe.

 

[retire48in2018]

I am unaware of any situation that has earned income (required for contribution) that does not require SS income taxes.

 

[Slim11]

Railroad and police and fire in NJ. They dont pay into Social Security. Nor can we collect it. If we work a second job, we can get 40 percent of what a normal person would. But we do not pay into SS, nor does the employer.

 

[retire48in2018]

Ok - the better answer is that earned income is required for a 401k or IRA contribution. In most cases that’s means the income is SS taxable. Most of exceptions are tied to certain professions that have an alternative to SS.

Most pensions are not considered earned income.

 

[Slim11]

I get the earned income part. Ty.

 

[youbet]

Income must be subject to social security taxes to be eligible for Roth

I don’t believe that is correct.

Edit: Now having read the whole thread, I see several others already pointed out retire48’s error.