What is required to qualify an individual to contribute to a traditional IRA?

To qualify an individual to contribute to a traditional IRA, earned income is essential. Earned income refers to money received for work performed, which can include wages, salaries, bonuses, commissions, or self-employment income. This requirement ensures that individuals are contributing to the IRA based on income derived from active work rather than passive income sources.

The focus on earned income reflects the intent of IRAs as savings vehicles specifically designed to help individuals save for retirement using their active earnings. This aligns with various tax regulations that govern the contributions to retirement accounts, ensuring that the money being saved or invested comes from productive labor rather than from investments or savings alone.

In contrast, investment income, retirement income, and savings accounts do not qualify as earned income, as they do not stem from work performed by the individual. Thus, while these other forms of income might contribute to financial stability, they do not satisfy the requirement for making tax-deductible contributions to a traditional IRA.