Stacey is in college. A close relative passed away and established a trust fund to provide for her college funding needs. She also receives a living stipend from the trust until she turns 22. This is her only source of income in the current tax year. Is Stacey eligible to make an IRA contribution

An IRA contribution is money you put into an individual retirement arrangement, abbreviated as an IRA.
IRAs are intended to assist people in accumulating a retirement nest egg by allowing them to save and invest money tax-free.
To contribute to a traditional IRA, you must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment, and/or your spouse if you file a joint return.

Eligibility for IRA contribution?

There are no income limits for Traditional IRAs1, but there are for tax-deductible contributions.
Roth IRAs have income restrictions.
If your modified adjusted gross income is less than $125,000 in 2021, you can make a full contribution to a Roth IRA as a single filer.

Does stipend counts in IRA contribution?

Taxable non-tuition fellowship and stipend payments are recognized as taxable remuneration for the purposes of IRA contributions commencing after 2019.
These are any monies included in your gross salary and paid to you to help you pursue graduate or postdoctoral studies.

Solution -

As it is given above stipend payments are recognized as taxable remuneration for the purpose of IRA contribution and there are no income limits for traditional IRAs.

Therefore, yes, Stacey is eligible to make an IRA contribution.

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