Roth IRA Contributions With No Job?

The IRS gets a little grumpy if you contribute to a Roth IRA without what it calls earned income. That usually means that you need a paying job—working for either someone else or your own business—to make Roth IRA contributions. But what if you don’t have one—a job, that is—and you still want a Roth?

Even if you don’t have a conventional job, you may be able to contribute to a Roth IRA.

The Good News

Although it’s not true in all cases, if you’re paying taxes on any type of income from working, then there’s a good chance you can make Roth IRA contributions. Although earned income typically includes wages, salaries, tips, bonuses, commissions, and self-employment income, it also includes some kinds of income that you might not immediately think of as “earned.”

Here are some examples of ways that you might fund a Roth without having a traditional job or steady pay.

If You Exercised Stock Options

When you exercise non-qualified stock options, you’ll probably pay income taxes on the difference between the grant price and the price at which you exercised the options. You may contribute this taxable income to a Roth IRA.

If You’re Awarded a Scholarship or Fellowship

Some scholarships and fellowships are taxable—especially those that pay for room and board, teaching, or research, or that include a stipend for living expenses. What’s important is that you’re paying income taxes on these funds. IRS Publication 970: Tax Benefits for Education covers this in detail. When you pay these taxes, you can usually use that income to justify a Roth IRA contribution.

If Your Spouse Has Earned Income

If your spouse earns income but you don’t, the IRS allows you to have an IRA of your own and use family funds to make your annual contributions. Often called a spousal IRA, these accounts act just like a normal Roth IRA does. The only difference is that it's your spouse’s income, rather than your own, that determines whether you qualify for a Roth IRA based on the maximum income limits.

Families often use the spousal IRA to double the amount they can contribute to IRAs each year. For the 2023 tax year, you can contribute up to $6,500 per person. If you’re age 50 or older, the limit is $7,500. That means couples can collectively contribute $13,000 to $15,000, depending on whether either or both are eligible for the catch-up contributions.

These amounts increase in 2024 to account for inflation. Thus, for 2024, you can contribute up to $7,000 per person, and the limit is $8,000 if you’re age 50 or older, meaning that couples can collectively contribute $14,000 to $16,000 depending on the catch-up contribution eligibility.

Also, to qualify for a spousal IRA, you must file your taxes as married filing jointly. If the spouse with no income later goes back to work, they can still contribute to their existing spousal IRA. After the account is set up, it’s an IRA just like any other.

If You Receive Nontaxable Combat Pay

You don’t necessarily need to pay taxes to contribute to a Roth IRA. For instance, if you receive nontaxable combat pay, which is reported in box 12 of your Form W-2, then you’re eligible.

The Bottom Line

Even if you don’t have a conventional job, you may be able to contribute to a Roth IRA with income earned from unconventional sources⁠—if you don't earn more than the income limits imposed by the IRS. As with any tax-related questions, individual situations can sometimes make a big difference, so it can be a good idea to check with a tax expert before making contributions.