Retirement tax questions

Yes, he can contribute to his IRA.  You are receiving the penalty due to how the income was reported in TurboTax.  The income will need to be entered as earned income under miscellaneous income.  Stipends are payments used for expenses other than qualified expenses and make their taxable income.  To enter into TurboTax, follow these steps:

1. Click Wage and Income
2. Scroll Down to Miscellaneous Income, Click Start
3. Click start next to "Other Income not already reported on a Form W-2 or Form 1099."
4. Click Yes for "Other Wages Received."
5. Click Continue until you get to "Any Other Earned Income"; Click Yes
6. Click Other and Continue
7. Enter the Description of other income and the amount
8. Click Done

For more information on the taxation of scholarships, see the link below:

Stipends

@TAD1965