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JUNE 1, 2018

Can I Contribute to a Roth IRA If I'm Retired?

Answered by
Debra Greenberg
Director, Personal Retirement Solutions Group
Yes, you can, but only if you have earned income. Roth IRAs were "designed to help people save for retirement with the advantage of tax-free growth," says Debra Greenberg, a director in the Personal Retirement Solutions Group at Bank of America Merrill Lynch. So they're really most useful as a way to invest for growth in the years before you retire.
For purposes of the annual limit, "compensation" includes wages from employment or earned income from self-employment.
That said, unlike traditional IRAs, Roth IRAs have no age limit for contributing. You just have to have compensation equal to or greater than your contribution. Also, be aware that your eligibility to contribute is phased out, based on modified adjusted gross income (MAGI) ranges that are published annually and correspond to your federal tax filing status. If your MAGI is less than the lower limit, you are eligible to contribute up to the annual contribution limit for the year; if your MAGI is between the limits, you are eligible to make a partial Roth IRA contribution; and if your MAGI is above the upper limit, you are not eligible to contribute to a Roth IRA.
Chart showing current amounts, in next paragraph
The Roth IRA MAGI ranges are: $122,000-$137,000 in 2019 and $120,000-$135,000 in 2018 (single and head of household); and $193,000-$203,000 in 2019 and $189,000-$199,000 in 2018 (married, filing jointly and qualified widow(er)). In 2019 the most you can contribute is $6,000 annually ($5,500 for 2018) if you're under age 50; $7,000 annually ($6,500 for 2018) if you're age 50 or older at any time during the year to which the contributions relate. Note that this annual limit applies to your total contributions to both traditional and Roth IRAs for that year.
For purposes of the annual limit, "compensation" includes wages from employment or earned income from self-employment. Income from Social Security, pensions or investments doesn't count. But earnings from a part-time or consulting job, for instance, would be included. Check with your tax advisor to see if your income would affect your eligibility to contribute to a Roth IRA.
Generally, if you're not earning any income, you can't contribute to either a traditional or a Roth IRA. However, in some cases, married couples filing jointly may be able to make IRA contributions based on the taxable compensation reported on their joint return.

How do spousal contributions to a Roth IRA work?

As long as your spouse earns enough to cover your contribution, and you file your taxes jointly, he or she could contribute up to the maximum allowable limit for you. So, for example, in 2019, if you're both 50 or older, as long as your spouse has $14,000 ($13,000 in 2018) in earned income and you and your spouse do not exceed the modified adjusted gross income limits, your spouse could contribute up to $7,000 ($6,500 in 2018) to a Roth IRA in his or her name, and up to $7,000 ($6,500 in 2018) to a Roth IRA in your name.
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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. Visit our Rollover IRA page or call a Merrill Edge® rollover specialist at 888.637.3343 for more information about your choices.
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