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#1
03-12-2018, 11:16 AM
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Is it possible to route a pension check directly to an IRA as a pretax contribution?
I can start receiving a SMALL monthly pension from a job I worked decades ago. I'm wondering if there is a way to take this monthly pension payment and somehow put it into my IRA as a Pre-Tax IRA contribution.
Anyone know if that is possible? Thanks! 
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#2
03-12-2018, 11:21 AM
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Contributions to IRAs, both Roth and Traditional, have to come from earned income. Pensions are not considered earned income. Earned is stuff like wages, salaries, tips, etc. If you have other earned income, you may contribute to an IRA.
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#3
03-12-2018, 11:22 AM
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#4
03-12-2018, 03:21 PM
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I will be facing a similar situation at the end of the year. I have been told (but you should verify with your own tax advisor and pension representatives) that I can arrange to have a lump sum distribution from my pension rolled over into an existing IRA. I am not sure I want to do this, so I haven't done my double checking and due diligence, and I am still 7 months away from being eligible. So I don't know how much confidence to have in what I have been told. But it is a lead that you can follow up on.
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#5
03-12-2018, 03:38 PM
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That's very possible, Rich... just depends on the details. A rollover is very different from new contributions and isn't taxable if done correctly. I'd research that decision thoroughly. I've seen folks take money out of pensions and roll into IRAs just because they thought they'd have more personal control. Be sure the pension doesn't offer particular benefits that you really don't want to lose.
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#6
03-12-2018, 03:48 PM
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I just started collecting 3 separate pensions. I had the option to take lump sum but my understanding is that the full amount would be taxable in the year you take it. By spreading out the small pension payments, not nearly as much tax impact.
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#7
03-12-2018, 04:30 PM
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#8
03-12-2018, 05:12 PM
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If you are receiving retirement income only and no earned income, you cannot contribute any monies to an IRA. If you are married and your wife has "earned income", you may contribute to an IRA. There are limits to the amount you may contribute.
__________________
Nothing bothers me unless I let it. Martin D18 Gibson J45 Gibson J15 Fender Copperburst Telecaster Squier CV 50 Stratocaster Squier CV 50 Telecaster Last edited by rokdog49; 03-12-2018 at 05:21 PM.
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#9
03-12-2018, 05:21 PM
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#10
03-13-2018, 05:22 AM
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Why not just take the pension and invest it in other ways? Put it into a tax exempt municipal bond fund and forget it.
__________________
Waterloo WL-S, K & K mini Waterloo WL-S Deluxe, K & K mini Iris OG, 12 fret, slot head, K & K mini Follow The Yellow Brick Road
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#11
03-13-2018, 04:48 PM
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#12
03-13-2018, 08:20 PM
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This pension is pretty small. I talked it over with my wife and we decided to just contribute it to a worth while 3rd world charity (we personally know several and can validate the funds will be well used). For us to invest the money for ourselves would be like putting a teaspoon of sugar into a lake. To send the money to an orphanage will be like putting a teaspoon of sugar into a glass of tea.
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