Monday, December 10, 2012 - 12:29 PM

IRA Contributions

My husband retired in Jan. 2012 and only received one paycheck for the year. He also received a bonus in Jan. 2012 for 2011 compensation.

Does anyone know is we can contribute the bonus as 2012 income? I don't even know if a bonus qualfies for IRA's.

Maecl59 posts since
Jul 6, 2010
Rep Points: 475

1. Monday, December 10, 2012 - 12:48 PM

Here's what IRS pub 590 says about compensation that qualifies for IRA contributions:

Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans).

It appears the IRS would expect that the compensation would be listed on a 2012 W-2.

KenBDG5,178 posts since
Nov 29, 2009
Rep Points: 117,661

2. Monday, December 10, 2012 - 1:21 PM

Thanks Ken. That information is a great help for our savings, especially in this environment.

Maecl59 posts since
Jul 6, 2010
Rep Points: 475