Let’s say if I earned $1000 from stocks, and didn’t work from January 2025 to July 2025 due to the massive tech layoffs, and then I will start to have earned income in September 2025.
However, in August 2025, I already know I will make some earned income, so I contribute $200 to my Roth IRA and buy some stock or ETF.
According to the rule, the $1000 I earned from stocks cannot count towards “earned income”, and I can only contribute to the Roth IRA if I have earned income.
However, let’s say from September to December 2025, each month I make $5000, so the $200 I contribute in August should be ok, if we consider the contribution and the earned income occurred in the same year.
However, ChatGPT 5 said, this would be considered a violation, because I contribute to the Roth IRA, before I have any earned income. And it will be 6% penalty each year, until I correct this issue. And there will be other penalties as well. So meaning that $200 can be all gone, or become a penalty like $3000 when it is 20 years later when I retire.
However, ChatGPT later on said that, if the earned income and contribution happen in the same year, then it is all ok.
So is it ok, or is it not?
