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Can we have a IRA without affecting the benefits we receive?

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Rev. Ashley

Question

We never stop seeing the clock ticking after we reached a certain age so it makes us really ponder.

What is the maximum we can put in a IRA per year or per month without being penalized in any way (either lose partially our benefits or pay taxes on the pension we use to fund the IRA account) when we are on a pension?

In other words, the person would take a small portion of their pension to put it in an IRA.

Could this work? Am I mistaken in any way?

 

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From the IRS website:

How much can I contribute?

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

  • For 2021, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.
  • For 2022, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.
  • For 2023, $6,500, or $7,500 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.

Can I Invest My VA Disability Money?

Here is a good article.  I would also do some more research and possibly as a proffesional.  

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Definitely read the link @shrekthetank1 posted. You need to make sure you understand the difference between having earned income and not having earned income. I *believe* (you need to verify the accuracy of the information) that for most recipients, VA disability is not considered "earned" income. I'm able to contribute to an IRA because my wife earns an income, but I don't have an earned income.

It seems to me that this was a topic three or four years ago in which some really good information was posted, but I'm not finding it.

Semper Fi,

Sgt. Wilky

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Just now, brokensoldier244th said:

Its passive income, not employment. The va doesn’t care what you invest in. 

Yes, but the IRS does, I guess...lol. 

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Yes, contributions to an IRA are limited to the amount you have as "earned income".  Thus, unless you have a side job where you "earn income", a 100 percent disabled Veteran wont have earned income to contribute to an IRA.  

Of course, disabled Vets can still have investment income, from things like stocks, bonds, mutual funds, and the like, and that is taxable.  

After you reach 72 1/2, you have a minimum required distribution (mdr) on your IRA.  In other words your current IRA's are tax deferred until you take the money out, but you must take it out on a schedule beginning at your age 72 1/2.  You will have a tax penalty if you dont withdraw money from your IRA.  Money withdrawn from an IRA is taxable.  But there may not be much, if any, tax on withdrawals from your IRA, if you dont have much other income.  

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