Can You Contribute to a Roth IRA After Retirement?
Your ability to contribute to a Roth IRA after retiring depends on your financial circumstances, not your employment status. Learn what makes you eligible.
A Roth Individual Retirement Arrangement (IRA) is a retirement savings account that allows for tax-free growth and withdrawals in retirement. Contributions are made with money that has already been taxed, which is the primary reason for its appeal. This structure means that qualified distributions, typically taken after age 59½, are not subject to federal income tax. The ability to contribute depends on rules set by the Internal Revenue Service (IRS), not employment status.
The Earned Income Requirement
The rule governing Roth IRA contributions is the requirement to have taxable compensation, referred to as earned income. The factor is the source of an individual’s income during the year. If a retiree has sufficient earned income, they are permitted to make contributions, regardless of their age.
Certain types of income are considered eligible compensation for making a Roth IRA contribution. This includes wages, salaries, tips, and commissions received from part-time or full-time employment. Net earnings from self-employment, such as income from a freelance business or consulting work, also qualify if the individual actively participates in the business.
Conversely, many common sources of retirement income do not qualify as earned income for Roth IRA purposes. This list includes:
- Distributions from pensions and annuities
- Social Security retirement benefits
- Income generated from investments, such as interest, dividends, and capital gains
- Rental income from a property, unless it is part of a trade or business where the owner provides significant services
Contribution and Income Limitations
Beyond the earned income requirement, two other limitations govern how much an individual can contribute to a Roth IRA each year. The first is an annual contribution limit set by the IRS. For the 2024 and 2025 tax years, an individual can contribute up to $7,000. Those who are age 50 or older are permitted to make an additional “catch-up” contribution of $1,000, bringing their total possible contribution to $8,000 per year.
A person’s total contribution to their Roth IRA cannot exceed their earned income for that year. For example, if a retiree under age 50 earns $4,000 from a part-time job, their maximum contribution for the year is limited to that $4,000, not the full $7,000.
The second major constraint involves Modified Adjusted Gross Income (MAGI). For 2025, the ability to contribute to a Roth IRA is phased out for single filers with a MAGI between $150,000 and $165,000. For those who are married and filing a joint tax return, the phase-out range is between $236,000 and $246,000. Contributions are completely disallowed once income exceeds the upper threshold.
Spousal Contribution Rules
A provision in the tax code allows contributions to be made for a spouse who has little or no earned income. This is referred to as a spousal IRA contribution. To qualify, the couple must file a joint federal income tax return for the year the contribution is made. This allows a household to continue saving for retirement even if one spouse is not working.
The working spouse must have enough earned income to cover their own IRA contribution as well as the contribution for the non-working spouse. For instance, consider a married couple where one spouse is retired with no earned income and the other earns $80,000. If both are over age 50, the working spouse can contribute $8,000 to their own Roth IRA and an additional $8,000 to the retired spouse’s Roth IRA, for a total of $16,000.
Addressing Excess Contributions
Making a contribution to a Roth IRA when ineligible results in an excess contribution. This can happen by contributing more than the annual limit, contributing without sufficient earned income, or making a contribution when your MAGI is above the allowable limit. Such errors can occur if an unexpected bonus pushes income into the phase-out range after a contribution has been made.
The IRS imposes a 6% excise tax on any excess contributions for each year they remain in the account. This penalty is calculated and reported on Form 5329. The tax continues to apply annually until the excess amount is corrected.
To avoid this penalty, the excess contribution, along with any net income attributable to it, must be withdrawn by the due date of the individual’s tax return, including any extensions. The withdrawn earnings will be subject to income tax. If the mistake is discovered after the tax return has been filed, the individual can still remove the excess amount within six months and file an amended return to avoid the 6% penalty.