"IRA distributions are considered ordinary income IRA distributions fully taxable Dear Tax Talk: I am considering rolling over an IRA account into another IRA investment. When I remove my funds from this new IRA account, how do I calculate what is taxable? -- Sharon Dear Sharon, Many people confuse their individual retirement account with other types of investments. Generally all distributions from an IRA are fully taxable. Even if you withdraw less than you contributed to the IRA, the distribution is fully taxable. Regardless of the types of investments the IRA has had over the years, all distributions are considered ordinary income. IRA distributions are never considered capital gain no matter what the IRA invests in. Individual retirement accounts are usually created from tax-deducted contributions to the account. Hence, that is why all distributions are taxable. Only if you chose to make nondeductible contributions to the IRA would you recover some of the distribution tax-free. Nondeductible contributions came around in 1987, and recently have been fairly liberalized. Anyone can make a contribution to a nondeductible IRA provided they have earned income. Your adjusted gross income, or AGI, and employer-sponsored plan participation does not matter. If you have non-deducted contributions to an IRA, you do not have to keep track of the account separately. Instead, a portion of your distribution is not taxed, based on the value of all your IRAs, not just that one." Source and further information: http://www.bankrate.com/cbsmw/itax/tax_adviser/20071004_IRA_distributions_a1.asp

Sorry but you didnt answer the question. I know that distributions are considered ordinary income but are they considered earned income thats my question because I want to contribute additional deductible monies to my ira...thanks

I don't understand what you mean by contributing additional money to your IRA. Once you are of retirement age you must take out a required minimum distribution and you CANNOT put money into an IRA anymore. Even if you have earned income from working you can't contribute. I asked our accountant about this. I think you are asking whether you can withdraw the RMD, pay the taxes on it and then put the same money back into an IRA. If that's the question, the answer is no.