Can a person who is retired continue to fund an IRA?
Answers
2709 points
Oldman answered 10 months ago …
You can fund an IRA (subject to the particular age limit contributions/yr) from any EARNED INCOME that is or would be subject to Federal Income Tax.
Ex. You are 45, retired, havent' worked for 11 mos. and suddenly get an offer to do "consulting". You will be paid $5000 this year. After you sit down...you can contribute 4K, and 'deduct this" or pay taxes and get a 4000 tax basis in a new IRA.
Never, NEVER, add to an existing IRA.
EX: You are 55 ...etc...you can contributre the entire 5K, using other sources of income to make up for the FTWH on the consulting fee.
You may not contribute any investment income.
2709 points
Oldman answered 10 months ago …
P.S. I forgot scenario 3: You're retired and have been getting SSI, taking MRD's for 10 years, and suddenly at age 80+, you get a part-time job...you may NO LONGER contribute to any IRA. The age limitation on contributions begins when you reach the year in which you are required to take min. reqd dist. If you now have income from a Co. that has a 401k or 403b, you can still contribute, but you still must take min. Reqd distrib. each yr. from those accounts.
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3970 points
EthanR answered 10 months ago …
Dave, this answer comes from Investopedia:
For the purposes of contributing to an IRA, compensation (i.e. earned income) does not include income from a pension, an annuity or Social Security. Generally speaking, you must have earned the income by performing services (i.e. work) or received it as alimony and/or a separate maintenance for it to be considered compensation for the purposes of contributing to an IRA.
Hope that helps.
