The timing of your IRA contributions can determine how much they grow over time and how much you'll have to use in retirement. So, it's important to learn how early and late in life you can start socking money into your traditional and Roth IRA accounts.
Prior to 2020, the maximum age limit to contribute to a traditional IRA was 70 1/2. In 2020 and beyond, as a result of the SECURE Act, there is no maximum age at which you can make a contribution to a traditional or Roth IRA.
- There is no maximum age limit to contribute to traditional and Roth IRAs.
- There’s also no minimum age, but you do need to have taxable compensation.
- There’s no minimum or maximum age to roll over an account to an IRA or make an IRA transfer.
No Maximum Age Limit for IRA Contributions
- Traditional IRA: For a traditional IRA, as of January 1, 2020, there is no maximum age at which you can make a contribution as long as you have sufficient taxable compensation to support the contribution amount.
- Roth IRA: There is no upper age limit to make a contribution to a Roth IRA, either before or after 2020. You must have taxable compensation, though.
If neither you nor your spouse has taxable compensation, you cannot contribute to an IRA in tax year 2020 and beyond, regardless of age.
No IRA Age Limit on IRA Rollovers or Transfers
Don’t confuse IRA contributions with IRA rollovers or transfers. Some retirees mistakenly believe they cannot open an IRA account and then roll their lump-sum pension distribution or 401(k) plan to an IRA because they exceeded the IRA age limit under the old rules. This is incorrect.
An IRA contribution is not the same thing as an IRA rollover or IRA transfer. When you move money from a company-sponsored retirement plan, such as a 401(k) or 403(b), directly to an IRA, that is called a "rollover." You can do that at any age. When you transfer money from one IRA to another IRA it is called an "IRA transfer," and you can also do that at any age. In contrast, a contribution is new money that was not previously in a tax-deferred account and that you are now putting into an IRA.
Do not confuse Roth conversions with contributions, either. There is no upper age limit on your ability to convert traditional IRA assets to Roth IRA assets. You can do that at any age; however, conversions can't be done on amounts that must be distributed from your traditional IRA for a particular year. That includes the calendar year in which you turn 72 (70 1/2 if you reached that age prior to January 1, 2020) under ordinary required minimum distribution rules.
Spousal IRA Contributions
Many people are not aware that they can make a spousal contribution to an IRA on behalf of a non-working spouse as long as one spouse has sufficient taxable compensation.
For example, suppose you don't have the compensation to contribute to an IRA, but your spouse does. You can still make a spousal IRA contribution to a traditional IRA. Spousal IRA contributions to Roth IRAs are also allowed.
Minimum Age Limit for IRA Contributions
There is no minimum age limit to make any type of IRA contribution. However, to be eligible, you must have taxable compensation in an amount that equals or exceeds the amount of your IRA contribution. Taxable compensation is income you've worked for, including salaries, wages, and self-employment income. Parents can also establish Roth IRAs on behalf of minor children, provided that what the minors earn meets the IRS definition of taxable compensation.
Other Age-Related IRA Rules
There are two additional age-related IRA rules that all IRA account holders should know:
1. Age 59 1/2: This is the age at which you can begin to access your IRA money and take withdrawals, and the IRA early-withdrawal penalty tax will not apply. However, ordinary income taxes will still apply. This rule applies primarily to traditional IRAs. Roth IRAs work a little differently. With those accounts, you can withdraw your contributions any time without an age restriction, but if investment gains or converted amounts are withdrawn, age limits or time limits are applied to determine what portion will be taxed.
2. Age 72 (or age 70 1/2 if you reached that age prior to January 1, 2020): This is the age at which you must begin to take withdrawals from traditional IRAs and most qualified retirement plan money (such as 401(k)s, 403(b)s, and SEPs). These withdrawals are called "required minimum distributions" (RMDs). Required minimum distribution rules do not apply to Roth IRAs while you are alive. However, they do apply to Designated Roth Accounts offered in a 401k plan, and they also apply to Roth IRA accounts that are inherited.