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Can I put my SSI & long term disabilityy checks into IRA or 401k accounts?

Apr
07
2011
By Guest (not verified)

I receive SSI and long-term disability checks each month and I am classified as permanently disabled.
I am 61 so I believe that I can place up to $6,0000.00 per year into a retirement account (IRA). Is there any legal reason(s) that would prohibit me from doing this?
I have a retiremnent account set up with a private management company already inforce - can I place more money into it each year?

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Submitted by Site Admin on Thu, 04/07/2011 - 23:34

This would require some digging -- check with your tax adviser. My suspicion is it won't be allowed.

To save in an IRA, you need to have "taxable compensation" during the year.

"Taxable compensation" includes :

  • Wages and salaries
  • Commissions
  • Self-employment income (sole proprietorship)
  • Taxable alimony
  • Nontaxable combat pay

Taxable compensation does not include :

  • Rental income
  • Dividends and interest
  • Pension income

In some cases, if you receive a W-2 for disability payments, they may be may be considered as "taxable compensation", especially if they're from a private insurer. Do you receive a W-2 for your Social Security disability payments?

http://www.irs.gov/publications/p590/ch01.html


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