Is NQSO income qualified for Roth IRA contributions?

October 10, 2014

Date:   17 Feb 2012
From:   Jonathan


I need clarification if possible.

If a retiree from a company exercises non-qualified stock options, can the income reported on Form W-2 with respect to the options be considered “earned” for making a contribution to a Roth IRA?

Thanks for the insight.



Date:   12 Mar 2012

Hello Jonathan,

The IRS answered a similar question relating to a contribution to an IRA some time ago.

They said income from exercising a non-qualified stock option is considered to be a form of nonqualified deferred compensation, not qualifying for computing a Roth or IRA contribution.

Best wishes,

Mike Gray

For more information about non-qualified stock options, request our free report “Executive Tax and Financial Planning For Non-Qualified Stock Options”.

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