Does alimony count as compensation for an IRA?

The rule

In its list of what counts as compensation, Publication 590-A (2025) says that for IRA purposes compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance, but only with respect to divorce or separation instruments executed on or before December 31, 2018 that have not been modified to exclude such amounts. The word taxable is doing the work. Alimony under later instruments is outside the rule, so the publication does not count it. For older instruments, the payments are taxable to the recipient and the IRA rules treat them as if they were earnings from work, which lets a person with no job still fund an IRA.

Why it matters when you have no job

The practical consequence appears in the publication’s section on when contributions can be made. For any year in which you do not work, contributions cannot be made to your IRA unless you receive taxable alimony, nontaxable combat pay or military differential pay, or file a joint return with a spouse who has compensation. So a person whose only income is alimony from a 2015 divorce decree has compensation equal to the alimony received and may contribute up to that amount, subject to the annual cap. The same person with alimony under a 2020 decree has no compensation and cannot contribute.

Worked example

Suppose that in 2025 you are 52 and receive $9,000 of alimony under a 2016 decree that has never been modified, plus $3,000 of wages. Your compensation is $12,000. The 2025 cap for someone 50 or older is $8,000, so your limit is $8,000, the smaller number. Now change the facts: the decree is from 2021. Only your $3,000 of wages is compensation, and your limit is $3,000. The calculator above does exactly this arithmetic. Tick the box only if the alimony is taxable to you under a pre-2019 instrument, and try both year settings: for 2026 the cap becomes $7,500, or $8,600 at 50 or older.

Nontaxable combat pay

If you were a member of the U.S. Armed Forces, compensation includes any nontaxable combat pay you received, which should be reported in box 12 of Form W-2 with code Q. It is a special case: the publication elsewhere says amounts you exclude from income are not compensation, but then makes an explicit exception for combat pay. The contribution section also mentions military differential pay. Reserve members may also repay qualified reservist distributions into an IRA beyond the ordinary limit, up to two years after active duty ends; those repayments are not deductible.

What alimony does not do

Alimony counted as compensation increases only the base on which the cap is measured. It does not raise the cap itself, and it does not make the contribution deductible if you or a spouse is covered by a workplace plan and your modified AGI is in the phase-out range. For that question see the traditional IRA deduction phase-out calculator. Alimony also does not turn income from property into compensation: interest, dividends and rent stay outside, along with pensions and deferred compensation received.

Deadline and over-contributions

Contributions for a tax year can be made during the year or by the due date for that year’s return, not including extensions; for 2025 that was April 15, 2026. If you contribute more than your compensation allows, for example by counting post-2018 alimony, the excess is subject to a 6% tax for each year it remains unless withdrawn with its earnings by the return due date, including extensions. Check which side of the 2018 line your decree falls on before relying on it, and confirm with the decree or your tax adviser whether it has been modified. For the broader eligibility rules see can you contribute to an IRA with no income.

Sources

• IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) (2025): What Is Compensation? (Alimony and separate maintenance; Nontaxable combat pay); When Can Contributions Be Made?. Read November 2, 2026.

Edition read: Publication 590-A (2025), for use in preparing 2025 returns, including its What’s New for 2026 note. Dollar limits and dates are for the year stated; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.