Do you need earned income to contribute to a Roth IRA?

Answer 1

You must have earned income for the year in question, equal to or above the amount to be contributed for that year.

However, the actual source of the income does not have to be the earned income itself.

For example, it could be part of an inheritance or from capitol gains.

If you use a Tax Preparation Program, such as Turbo Tax, the program has a module that will calculate whether or not you qualify to contribute to a Roth or Traditional IRA in any given year, as well as the maximum you may contribute. This calculation takes place as part of the "Final Audit" phase at the end of the process.

Turbo Tax also compares a Roth contribution vs. a Traditional IRA contribution for the year, based on your individual situation based on the information you input while preparing your return.

Answer 2

Generally speaking, you do need to have earned income in order to contribute to either a traditional or a Roth IRA. There are a few unusual ways to generate that income that doesn't necessarily require that you have a job, though. I've listed four ways you can do this below:

1. If your income is solely from exercising non-qualified stock options. When you exercise a non-qualified stock option, the taxable component of the option exercise is considered taxable income, and therefore is eligible for contribution to an IRA.
2. Alimony. If you receive alimony, it is taxable as ordinary income, which is eligible for IRA contribution.
3. Scholarships and Fellowships - if these are taxable, reported in box 1 of a W2 form, they're eligible for contribution to an IRA.
4. Spousal contribution. If your spouse has earned income (and you have none or not enough to make a maximum contribution), you are eligible to make an IRA contribution based on your spouse's income. The limit is that the total of all IRA contributions (yours and your spouse's) cannot exceed the earned income of the working spouse.