Here’s the rule, straight from the IRS: you can only contribute to a Roth IRA if you have taxable compensation. That means wages, tips, freelance income, a part-time job — something you actually earned. No income, no contribution. Full stop.
This catches a lot of young people off guard. You might have savings sitting in your bank account. You might have gotten birthday money, a gift, or a scholarship. Doesn’t matter. None of that counts as earned income for IRA purposes. The IRS is specific about this. (Note: some taxable scholarships or fellowships may qualify — if you’re unsure, check with a tax professional.)
The good news is you don’t need to earn much. The IRS gives a real example: a college student named Danny who earned $3,500 in 2020 could contribute up to $3,500 to his IRA that year. You can contribute up to whatever you actually earned — or the annual IRA limit, whichever is lower. (The annual limit has gone up since then — check the IRS website for the current year’s cap.) So even a part-time job flipping burgers or babysitting a few hours a week can unlock this.
One other thing worth knowing: if you’re married and your spouse has earned income, they may be able to contribute to an IRA on your behalf even if you didn’t earn anything yourself. That’s called a spousal IRA. It doesn’t apply to most teens, but it’s worth knowing the rule has nuance.
But here’s the thing that stings. Every year you’re eligible and don’t contribute, that window closes forever. You can’t go back and make up for 2022 in 2025. The IRS doesn’t allow catch-up contributions for missed years when you were young — those are only for people 50 and older. The years you lose in your teens and early twenties are genuinely the most valuable ones, because money invested earlier has the longest time to grow tax-free.
So if you’re working — even part-time, even just a summer job — it’s worth knowing this option exists. And if you’re in a year where you have zero earned income, that’s fine too. Just don’t assume you can make it up later, because you can’t.