Individuals are eligible to make IRA contributions if they have earned income. Earned income includes taxable employee compensation and net earnings from self-employment, as well as certain disability payments.
According to IRS rules, the two ways to get earned income are being employed or self-employed. To see a complete list of what does and does not qualify as earned income please visit the IRS website.
There is a spousal IRA exception to the earned income requirement for those married filing jointly with a non-working spouse. In this case, the working spouse can contribute to an IRA on behalf of the non-working spouse, provided the working spouse has sufficient income to cover both contributions. All Adjusted Gross Income (AGI) and annual contribution limits still apply.
- Gifts: You may give money to someone else, who can then use it to contribute to their own IRA. Be mindful of the annual gift tax exclusion limits set by the IRS to avoid any gift tax issues.
- 529 Plans: Although 529 college savings plans are not retirement accounts, they permit contributions from anyone, including family and friends. These contributions can help cover education expenses, and some states offer tax benefits for contributing to 529 plans.
- Minors Contributing to IRAs: A working minor is allowed to contribute to a parent’s IRA.
For more information on how to fund your STRATA IRA, visit Fund My IRA.