IRA Contributions with FEIE

I just saw this:
https://www.irs.gov/individuals/international-taxpayers/individual-retirement-arrangements

Contributions to your individual retirement arrangements (IRAs) that are Traditional IRAs or Roth IRAs are generally limited to a certain annual dollar amount ($6,500 for 2023, or $7,500 if you were age 50 or older by the end of 2023; $7,000 for 2024, or $8,000 for individuals age 50 or older by the end of 2024) or your compensation that is includible in your gross income for the tax year.

If you exclude income under the foreign earned income exclusion or the foreign housing exclusion, you must add back the excluded amounts in determining your compensation for purposes of the IRA limits. Likewise, for purposes of determining the IRA limits, do not reduce your compensation by any foreign housing deductions.

If you are covered by an employer retirement plan at work, your deduction for your contributions to your traditional IRAs are generally limited based on your modified adjusted gross income. This modified adjusted gross income is figured without taking into account the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. In other words, you must add back any excluded amounts under the foreign earned income exclusion or foreign housing exclusion, and any deducted amounts under the foreign housing deductions, in determining the modified adjusted gross income limits for your traditional IRA contributions.

Seems completely clear cut and dried. So we can contrinbute $7k non-deductible to Traditional IRA, roll over to Roth and keep it there? Usually things aren't like that though in this area so asking here what I am missing?

I was looking at only partially excluding, but found out this wasn't possible. But now this is straight from the IRS and the wording seems very clear. So we can definitely do it? I have to do backdoor Roth because of MFS, but that's fine I think based on this page.

I thought you could only contribute to an IRA from U.S. sourced earned income.

It does seem clear that any US Citizen who has earned income can contribute to an IRA. I can’t see anywhere that says the earned income has to be sourced in the USA. Looking on the irs.gov site I don’t see anything other than it has to be earned income. I have never been in this situation while living in England so never thought about it before.

An AI search also says this.

AI Overview

Anyone with taxable compensation (earned income) can contribute to a Traditional IRA in 2025, regardless of age or income level (though high earners might not get a tax deduction), while Roth IRA contributions have income limits based on your filing status, with full contributions allowed for single filers under $150k MAGI and joint filers under $236k MAGI, phasing out above those levels. Both types have a $7,000 contribution limit for 2025, with a $8,000 catch-up for those 50 and over.