In order for my Mom to be claimed as a dependant she has to have less than $3,900.00 income per year. Is her retirement considered as income?

#1; Correct;$3.9 K for 2013; you need to calculate the total gross income for your mother. In order to qualify as a dependent, your mother's total income for the tax year must not exceed $3.9K. Social Security payments and and tax exempt interest your mother receives are not included in this calculation. Retirement income poses the greatest threat to being able to claim someone as a dependent.

#2;It depends on where your mom’s retirement income will come from, and how much of it she will have. Most pensions are a source of taxable retirement income. Aslongas a plan,i.e., 401K/ IRA was funded with pre-tax dollars, whether by her or her employer, it will result in taxable retirement income when withdrawn.