Long term disability and retirement plans

[The Walk of the Penguin Mich]

In Dec. 2011, I left the workforce disabled.  I applied for LTD after 6 months and it was awarded effective June 2012. 

The way that LTD works is that the university covers 6 months of my salary at 100%, so from Jan. to June of 2012, I received my normal paycheck - which included MY contributions to my 403b.  After 6 months, my income dropped to 70% which is offset by SSDI, LTD and my (post tax) premium paid supplemental LTD.

I understand that since my supplemental LTD policy premium was paid by me with post tax income, this income is not taxable.  Is this correct?

Secondly, since the first 6 months of this year was paid as a normal salary, can I assume that I can still contribute to an IRA for 2012?  I'm going on the assumption that since I was able to contribute to my 403b during these months, I am also able to contribute to an IRA as well.  I know that this year (2013), unless my disability status changes, I will not be able to contribute myself.

[Deleted]

> I understand that since my supplemental LTD policy premium was paid by me with post tax income, this income is not taxable.  Is this correct?

If you paid all premiums from after-tax income, policy benefits you receive are tax-free.  Internal Revenue Code § 105(a)


> ...can I assume that I can still contribute to an IRA for 2012?

If you received income reported as compensation on Form W-2 you are eligible to fund an IRA.  IRS Revenue Procedure 91-18 (January 1991). 

Since you are considered to be an active participant in a qualified pension plan, traditional IRA contributions may or may not be deductible. 

[The Walk of the Penguin Mich]

Thanks....

I'm assuming that you're talking about whether or not I can contribute to a traditional IRA (and use it as a deduction) is dependent upon my income level, or is there some other reason?

[mwcpa]

IRA deductiblity is dependent upon having "earned" income and if your income exceeds certain thresholds and you are a participant in an employer plan your deduction may be limited.