As of 2022, investors of any age can open a traditional or Roth IRA. However, individual retirement account (IRA) contributions depend on other eligibility requirements, such as earned income, and your age affects when required minimum distributions must occur.
- There is no age restriction for contributions to either Roth or individual retirement accounts (IRAs).
- Contributions to traditional IRAs beyond the age of 70½ years are allowed per the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.
- The Internal Revenue Service (IRS) requires that you have earned income to contribute to either type of IRA.
Types of IRAs
A traditional IRA allows investors to make contributions with a tax deduction equal to the contribution amount in the tax year when you made it. In return, you pay income taxes on your withdrawals or distributions in retirement.
A Roth IRA does not provide a tax deduction for contributions. However, any money withdrawn after the age of 59½ is tax-free, meaning no income taxes are applied to your withdrawals.
You have 15 months in which to make contributions for any particular tax year, commonly from Jan. 1 to April 15 of the following year and the Internal Revenue Service (IRS) allows you to put your money in a wide range of investments, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
There is no age restriction to open or contribute to Roth and traditional IRAs. There is also no age restriction if you are establishing a new IRA to which you will transfer or roll over assets from another IRA or eligible retirement plan, such as an employer-sponsored plan like a 401(k).
Age restrictions for contributions to traditional IRAs once existed, but that changed with the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019.
The maximum amount that you are allowed to contribute, your contribution limit, to either a traditional or Roth IRA for the tax year 2023 is $7,500 if you’re age 50 or older, $6,500 plus a $1,000 catch-up contribution. Beginning in 2024, with the passage of the SECURE 2.0 Act of 2022, IRA catch-up contributions will be subject to Cost of Living Adjustments (COLA) so that they will increase with inflation from the current $1,000 limit.
For 2023, the contribution limit for all IRAs is $6,500 or $7,500 if you are age 50 or older.
For both types of IRAs, you must have earned income, or what the IRS calls “taxable compensation,” to contribute. That includes wages and salaries, commissions, self-employment income, alimony, and separate maintenance and nontaxable combat pay.
Earnings and profits from property, interest and dividend income, pension or annuity income, deferred compensation, and income from certain partnerships are not included.
If you earn less than $7,500 in 2023, you can only contribute as much as you make. So if you only make $5,000 one year, that is the most that you can contribute.
You must take the required minimum distribution (RMDs) from a traditional IRA starting at age 73, but Roth IRAs are not subject to the same RMD rules.
The tax deduction for contributions to traditional IRAs varies. If a retirement plan at work covers you or your spouse, you may not be allowed to deduct any or all of your contribution on your tax return. Your income is a key determinant, as is your tax filing status, such as married filing jointly, single, widow(er), or married filing separately.
If you are not covered by a plan at work, and your tax filing status is single, married filing jointly, or married filing separately, you can take the full tax deduction regardless of your income.
Is There an Age Limit for Individual Retirement Account (IRA) Contributions?
You can open or contribute to an individual retirement account (IRA) at any age, but you must have what the Internal Revenue Service (IRS) considers earned income. If you earn less than the annual contribution limit, you can only contribute as much as you make for that year.
What Does the IRS Consider Earned Income?
Salary, wages, commissions, tips, bonuses, self-employment income, taxable non-tuition, stipend payments, and nontaxable combat pay are considered earned income by the IRS. Taxable alimony and separate maintenance payments for divorce or separation decree also count as earned income.
When Do I Need to Take Required Minimum Distributions (RMDs)?
You must start withdrawing a required minimum distribution (RMD) from your tax-deferred retirement accounts, such as a traditional IRA or 401(k) plan when you turn age 73. Roth IRAs are not subject to RMD rules, but Roth 401(k)s are unless you are still employed at the company that sponsors the plan.
The Bottom Line
You can open and contribute to an IRA at any age as long as you have earned income. If you earn too much, your contributions to a Roth IRA are reduced or eliminated. If you or a spouse contribute to an employer’s retirement plan, you may not be allowed to deduct some or all of your contribution to a traditional IRA.