Roth IRA contributions?

March 19, 2008 7:27 AM

Can I contribute to my Roth-IRA from my savings account if I don't earn an income?

I am currently a grad student, living solely off student loans. I don't use all the money I get in loans, so I have it stored in a high-interest savings account until I need it. Can I use the extra money in my savings account to contribute to my Roth IRA (less than 2000/yr)?

Since I don't earn an income, am I eligible to contribute to the IRA? (I can't find anything online that states that I am not eligible. References would be great.)

posted by ruwan to Work & Money (7 answers total)

No. (Unless maybe you are married and your spouse has earned income.)
posted by phoenixy at 7:39 AM on March 19, 2008

Nope. But there are other vehicles by which you can save for your future. And at the moment, a high interest savings account may just be a good place for your money to be and stay. IANYFA
posted by ilikecookies at 7:50 AM on March 19, 2008

Seconding high interest savings account.

Check out HSBC.
posted by nineRED at 8:17 AM on March 19, 2008

Small note: the "high interest" savings accounts won't be for long, with the massive cuts we've seen recently. My Emigrant Direct account has gone from 5.15% down to three point something, and will drop again in a few days with the cut from yesterday. It's still a good idea, but it's probably worth the effort to look for something a little higher return.

For instance, just to check out, look into a tax advantaged bond fund. It's liquid, and might be earning a better $ amount, alternatively a not-tax advantage fund might end up better since your tax rate is so low, just do the math (which I can help you with if you email/mefimail me).
posted by cschneid at 8:32 AM on March 19, 2008 [1 favorite]

I'm not sure why you'd need a tax shelter like an IRA if you don't have any income? Is it just to keep from spending the money? My guess (and it's just a guess) is that you can put money in the IRA, but you won't be "eligible" for the tax break, because you don't pay any taxes. Put it in high interest long-term savings accounts or CDs.
posted by nax at 10:06 AM on March 19, 2008

nax: there is no tax break for the Roth IRA because you are funding it with post-tax earned income. As noted above, no, you cannot contribute to a Roth IRA if you have no income. It can only be funded by taxable income. See IRS publication.
posted by detune at 12:19 PM on March 19, 2008

No. But if your spouse had income, yes.
posted by Ervin at 4:06 AM on March 20, 2008