I understand to contribute I must have earned income.  My daughter can
pay me to be her property manager- up to $5000 per year.  I would like
to make the maximum contribution to a roth- can I do this?  Will it
impact my SSI?

Hello and thank you for your question.

As you probably already know, in a Roth IRA contributions are not
deductible but earnings grow tax free and qualified withdrawals are
not taxable.
http://www.irs.gov/publications/p17/ar01.html

You can contribute to a Roth IRA while on Social Security, up to the
amount of your taxable compensation. You may continue to make
contributions to your Roth IRA even after reaching age 70 1/2.
http://www.irs.gov/taxtopics/tc309.html

As for SSI impact, the answer depends on your age.  If you have
attained your normal retirement age (age 65) then receipt of income
does not compromise your SSI benefits.  So only if you elected an
early benefit (usually age 62) and are still under 65 does the extra
income put your benefits at risk.
http://www.ssa.gov/OACT/COLA/rtea.html

In summary, if you're age 65 or older, go for it!

Search terms used:
social security retirement test
 "social security" eligibility "roth ira " site:irs.gov

Thanks again for letting us help

Sincerely,
Google Answers Researcher
Richard-ga

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Request for Answer Clarification by mjhealy-ga on 16 Feb 2005 14:42 PST

my dad was born 3/16/42 and just retired
can we pay him $5000 a year for managing our properties without impacting his SSI?

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Clarification of Answer by richard-ga on 16 Feb 2005 16:51 PST

That makes him 63, but checking the table at http://www.ssa.gov/OACT/COLA/rtea.html
he can earn up to $12,000 without loss of SSI benefits.

-R

thanks

IRAs are used for their tax advantage, unless you have a considerable
stock portfolio or something else, you don't pay taxes, so why not
just put the $5000 in savings and skip the paperwork and restrictions?

I want to build my savings- the roth will let my money grow tax free

MJ, it won't harm your SSI at all.  That money is yours because you've
paid into SS all these years and you deserve the cash :)

Do you currently have invested assets that are giving you enough
income that you have to pay taxes?  If you are making less than
$25,000 adjusted gross income then you will qualify for a 10% - 50%
tax credit (in addition to the tax deduction you get) on any money you
put into an IRA (up to $2,000), and that should wipe out much if not
all of the taxes you owe.

You're always elidgible to put money into an IRA, as there is no age
restriction for putting money in, and there is no age restriction for
taking money out of a ROTH IRA (a traditional IRA makes you start
taking money out at 70.5 years old).
I'm assuming you're over 50 years old, and this means that your
maximum contributions right now are $4,500 per year.  In 2008 that
will rise to $5,500.  (Note that this is $500 more than anyone under
50 can invest in an IRA per year.)

I recomend you check out Vanguard funds for your retirement fund:
http://flagship5.vanguard.com/VGApp/hnw/content/AccountServ/Retirement/ATSRetirementOVContent.jsp?gh_sec=n
From this link you can click on ROTH IRA (or IRA if you prefer) and
they have some information for you.  Vanguard funds have extremely low
costs associated with them and they have a long track record of being
a dependable company.  The phone number they provide for a retirement
specialist is 1-800-414-1321.

Best of luck in your retirement ventures, and feel free to ask if you
have any more questions.