The IRS defines it a "Taxable Compensation" not earned income which are different.
(And the first answer is correct. Lawsuit settlements are not taxable compensation for IRA's)
See IRS Pub 590A "What is compensation" for what is allowed and disallowed.
https://www.irs.gov/publications/p590a
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
