Does a taxable lawsuit settlement count as earned income for the purposes of the Roth IRA contribution limits? Say a taxable lawsuit settlement put you over the income limit - can you still contribute to a Roth IRA since Medicare and social security were not withdrawn? Similarly, does it count toward self employment income for the contribution limits of a SEP IRA? Thanks
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.