If an individual has only received interest and dividend income this year, what can they do regarding an IRA contribution?

An individual must have earned income to contribute to an Individual Retirement Account (IRA). Earned income includes wages, salaries, tips, and other compensation from providing services, as well as net earnings from self-employment. Interest and dividend income, while taxable, do not qualify as earned income.

Because the individual in this scenario has only received interest and dividend income, they do not have the necessary earned income required to make any contributions to a traditional IRA or a Roth IRA. Therefore, they are not eligible to contribute to an IRA in this case. This clarifies why saying that they cannot contribute to an IRA is indeed the correct interpretation of the situation.

In contrast, other options such as contributing a maximum of $6,000 or contributing to a Roth IRA disregard the requirement of earned income. The mention of a SEP IRA, which is a retirement plan typically used by self-employed individuals or small business owners, also requires earned income, and thus is not applicable in this scenario.