Making IRA Contributions in Retirement

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By Bob Veres with Inside Information

Here’s a question that some retired Americans may ask themselves from time to time: I recently stopped working, but I am only 65, can I still contribute to an IRA or a Roth IRA?  Can I reinvest some or all of my future required minimum distributions back into an IRA or a Roth IRA? 

The answer, generally, is that you can continue to make annual IRA or Roth IRA contributions, up to the maximum $7,000 limit including the catchup provision, only if you have earned income sufficient to cover the contribution.  In other words, if you live totally on Social Security, annuity payments, portfolio income, required minimum distributions and/or a pension plan, then you are not eligible to contribute.  Income from rental properties is also considered passive income or unearned.

But if you earn $5,000 in a year through self-employment income or from an employer, then you can make a $5,000 contribution, and no more.  If you earn more than $7,000, you can make the full contribution.  The caveat is that once you pass age 70 ½, you can no longer make contributions to a traditional IRA; only to a Roth IRA. 

And there are income limits that apply no matter what your age is.  You may be able to make a deductible traditional IRA contribution, assuming you are under age 70 ½, if your modified adjusted gross income is below $64,000 (single filer) or $103,000 (joint), with phaseouts thereafter that limit and finally eliminate your ability to deduct the contribution.  Single filers earning less than $122,000 or joint filers below $193,000 are eligible to make a full Roth contribution, but your ability to contribute begins to phase out with any earnings above these thresholds.

Complicated?  Of course, it is.  The traditional and Roth IRAs were created by Congress, after all.  If you are interested in learning more as to how this may apply to you and your financial situation, please do not hesitate to reach out to a member of the Vantage Financial team today.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual.  All data and information are gathered from accurate sources but is not warranted to be correct, complete or accurate




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