W-2, Court Settlement and IRA

[MnMnMarin]

I retired from Company XYZ in 2018, I was a member of a class action lawsuit which was just settled at the end of 2023.  I received a W-2 for 2023 and I understand that this is taxable income to me.  Are there any limitations to placing some of that money into an IRA, up to allowable limit of 7,500 since I'm 50+ ?  I'm a bit confused because I am retired yet I received a W-2, so I'm confused as wether or not that has any impact.  Thanks! 

[Bsch4477]

You would have to check with the attorneys handling the suit but it looks like you are receiving wages. If so, that is earned income which would allow you to make that contribution. 

[dmertz · Accepted solution]

The IRS treats the amount in box 1 of your W-2, minus any amount in box 11, as compensation eligible to support an IRA contribution for the year of the W-2.  For reference, see "What is Compensation?" in IRS Pub 590-A.