Can I Contribute to an IRA With No Earned Income?

You can't add to your IRA if you had no earned income.

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A traditional individual retirement arrangement provides working people with a tax-deferred way to build up savings that will provide income after they retire. Contributions to an IRA are deducted from your taxable earned income. The rules governing tax-deductible IRA contributions draw a critical distinction between income earned from working and income from other sources.


"Earned income" for IRA purposes includes wages, salaries, commissions, self-employment income, alimony, maintenance and tax-exempt combat pay. If you have income from other sources, such as rental property income or pension income, you can't contribute those funds to an IRA.

Roth or Traditional IRA Contribution Limits

For 2019, the max IRA contribution is the lesser of $6,000 ($7,000 if you're age 50 or older) or your total taxable compensation for the year. In order to contribute anything to an IRA, IRS rules require that you earn taxable compensation from work. The IRS defines "compensation" as income generated from a wage, salary, commission or self-employment. It also counts alimony, separate maintenance and tax-exempt military combat pay as compensation.

When No Contributions Are Allowed

You cannot make any contribution to an IRA if your income consists entirely of unearned taxable income from sources such as rental property, interest and dividends, pensions or annuities, or income from passive partnerships. The rules also exclude from the compensation definition any tax-exempt income from sources other than military combat pay.

Understanding Rules For Spouses

If you and your spouse both have compensation and neither of you will turn 70.5 years in the current tax year, each of you can have an IRA and make contributions to it. If you are married filing jointly, only one of you needs to have earned income in order to contribute to the IRAs of yourself and your spouse. IRS rules impute compensation to the non-earning spouse for purposes of figuring his or her maximum IRA contribution by subtracting the earning spouse’s IRA contribution from his or her compensation. If the result is greater than $6,000 (or $7,000 if you're age 50 or older), the non-earning spouse can contribute the maximum $6,000 (or $7,000) to his or her IRA.

Identifying Penalty Taxes

If you earned no compensation from work but made a contribution to your IRA anyway, the amount you contributed will be subject to the 6 percent penalty tax on excess contributions. The penalty tax will be applied each year that the excess contribution remains in your IRA. You can avoid the penalty tax by withdrawing the excess contribution before the due date of your tax return. You won’t owe taxes or penalties on the withdrawn excess contribution, but you will owe tax and penalties on any earnings that the excess contribution made while the money was in your IRA..

When You Can Withdraw Without Penalty

Generally, you can withdraw excess contributions without penalty as long as you withdraw them before the due date for your tax return for the year you made the contributions. Otherwise, you can't withdraw from a traditional, pre-tax IRA until you reach age 59 1/2 without being assessed a 10 percent penalty tax.

At What Age Can You No Longer Contribute to an IRA?

After age 70 1/2, you must withdraw from the IRA; otherwise, you could face a 50 percent excise tax.