For both the new Making Work Pay credit (for up to $400 per person) and to contribute to a Roth IRA, you need earned income to qualify in either case. Earned income includes wages from a job, and excludes investment income. What about [taxable] unemployment compensation? My inkling is that it is not earned income, but I wanted to be sure. Also this year I converted my full 401k to a Roth IRA. Is this considered earned income? I ask because it is earned (I worked for it at a job in past years), it is income, and it will be taxed this year. It is not exactly a pension, either, as it's staying in the account. I'm not retiring anytime soon. Thanks.