Can a 70-Year-Old Open an IRA?

According to the Internal Revenue Service (IRS), as of 2022, there’s no age limit that restricts investors from contributing to a traditional or Roth IRA. However, whether or not you can open an individual retirement account (IRA) or how much you can contribute depends on other eligibility requirements, such as the need to have earned income. Moreover, IRA age limits still affect when distributions must be taken from traditional IRAs.

Here’s a quick look at the main rules governing the two types of IRAs.

Key Takeaways

  • There is no age restriction for contributions to either Roth or individual retirement accounts (IRAs).
  • You can now make contributions to traditional IRAs beyond the previous age limit of 70½ years, thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act enacted in 2019.
  • The Internal Revenue Service (IRS) requires that you have earned income to be eligible to contribute to either type of IRA.

Types of IRAs

A traditional IRA allows investors to make contributions, and you receive 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 However, any money withdrawn after the age of 59½ is tax free, meaning no income taxes are applied to your withdrawals.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 year—typically from Jan. 1 to April 15 (or the tax filing deadline for that year) 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).

However, there are certain rules and restrictions, including contribution limits and income requirements.

Your Age

As already mentioned, there is no age restriction to open or make contributions 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).

Until fairly recently, there were age restrictions for contributions to traditional IRAs, but that changed as a result of the U.S. Congress passing the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019. Previously, you were only allowed to make regular contributions if you had not reached age 70½ in the year when you made the contribution.

The maximum amount that you are allowed to contribute—your contribution limit—to either a traditional or Roth IRA for tax year 2022 is $7,000 if you’re age 50 or older—$6,000 plus a $1,000 catch-up contribution (rising to $7,500 in 2023—$6,500 plus a $1,000 catch-up contribution).

The annual 2022 contribution limit of $6,000 or $7,000 if you are age 50 or older is for all your IRAs combined, Roth and traditional, not per account. In 2023, the combined limit for all your IRAs combined rises to $6,500 or $7,500 if you are age 50 or older.

Income

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. What doesn’t count are earnings and profits from property, interest and dividend income, pension or annuity income, deferred compensation, and income from certain partnerships.

If you earn less than $7,000 in 2022 (or $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.

In the case of a Roth IRA, your tax filing status and a high income may also curtail your contribution. For example, in 2022, single filers must have a modified adjusted gross income (MAGI) of no more than $144,000 ($153,000 in 2023) to be eligible to contribute the full amount. Contributions begin phasing out starting with a MAGI of $129,000 ($138,000 in 2023).

Tax Deduction

The tax deduction for contributions to traditional IRAs can vary, depending on certain conditions. If a retirement plan at work covers you or your spouse, you may not be allowed to deduct any or all of your contribution from your taxes. However, your income is a key determinant, as is your tax filing status, such as married filing jointly, single, widow(er), or married filing separately.

However, if you and your spouse 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.

You must take required minimum distribution (RMDs) from a traditional IRA starting at age 72, but Roth IRAs are not subject to the same RMD rules.

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 decrees that were executed on or before Dec. 31, 2018, 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 72. 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.