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Work your way into a Roth

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Q. I will be retiring this year but will receive some deferred compensation in 2016. Can I then contribute to a Roth IRA next year? A.D., Cheyenne, Wyo.

A. Not on these facts. With a Roth IRA, your annual contribution is limited to the lesser of your “earned income” or a specific amount. Thus, if you have no earned income in a year, no contribution is allowed. For this purpose, income counts for the year it is actually earned, so deferred compensation earned in 2015 won’t be treated as earned income in 2016. If feasible, you might work into 2016 to qualify for Roth contributions.

Tip: The Roth contribution limit for the 2015 tax year is $5,500 ($6,500 if age 50 or older as of year-end), but the ability to contribute phases out for upper-income earners.

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