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New Member
posted Jan 31, 2021 10:55:42 AM

What are allowable income sources for an IRA Contribution?

Is interest from saving bonds or certificate of Deposit (CD) earned income?

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2 Replies
Expert Alumni
Jan 31, 2021 11:08:13 AM

No.  Savings Bonds and Certificate of Deposits are considered unearned income. Please view this IRS link for further details.

Level 15
Jan 31, 2021 11:11:01 AM

IRA contributions can only come from "compensation," generally income reported in box 1 of a W-2 (minus any amount in box 11) or net earnings from self employment (although there are a few other special-case sources of compensation).  Interest from any source is not compensation and does not support an IRA contribution.  For more details, see What is Compensation in IRS Pub 590-A:

https://www.irs.gov/publications/p590a#en_US_2019_publink1000230355