If you’re retired and drawing payments from Social Security, you may be wondering if you could use those payments as contributions to a Roth or Traditional IRA. Unfortunately, Social Security is not considered earned income so it’s not counted towards what you’re allowed to contribute towards an IRA. Earned income is anything that is reported on a W-2 or something you put on a Schedule C, if it’s business income, or Schedule F, if it’s farm income.
This rule also applies for income you may derive from a pension, interest, dividends, rental income, or capital gains. So, all that interest you got from the bank doesn’t count as dollars you can put towards an IRA.