In short, I do not believe "deferred compensation" from a non-qualified plan counts as income for purposes of an IRA contribution/deduction. Turbo Tax sees a W-2 and assumes it is income for IRA purposes, and will prompt you to make an IRA contribution. It tricked me into making an IRA contribution for stock grants, though I caught the error before I filed (still had to pay a penalty). I reported this matter to TT, but never got a response.
Following is cut/pasted from IRS website, Tax Topic 451
Contributions
To contribute to a traditional IRA, you, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment. For tax years beginning after 2019, there is no age limit to contribute to a traditional IRA. Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation. In certain cases, other amounts may be treated as compensation for purposes of contributing to an IRA, including certain alimony and separate maintenance payments received, certain amounts received to aid in the pursuit of graduate and postdoctoral studies, and certain difficulty of care payments received.
