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Columns: Tax Talk
George Saenz, CPA   Expert: George Saenz, CPA
Tax Talk
Investing in a Roth IRA after retirement
Tax Talk

Roth IRA contributions don't have to end
 

Dear Tax Talk,
Can I work part time after I retire and continue to contribute to my Roth IRA?
-- Barb

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Dear Barb,
To contribute to any kind of IRA, you must have earned income. Earned income means either wages (line 7 of Form 1040), self-employment income (either from a sole proprietorship --Schedule C, or farming -- Schedule F), a partnership (Schedule E, Page 2) or alimony.

Your maximum contribution to any kind of IRA is limited to the lesser of:

  1. $4,000 ($5,000 if you are age 50 before the end of the year).
  2. Your net earned income

Unlike a traditional IRA, you can continue to contribute to a Roth IRA at any age. Also, unlike a traditional IRA, you don't have to commence required minimum distributions from a Roth IRA when you turn 70½ years old.

If you don't have a pension plan at work, you can contribute to a traditional IRA regardless of your income. With a Roth IRA, you can only contribute if your modified adjusted gross income is less than certain amounts that differ depending on your filing status.

For 2007, your Roth IRA contribution limit is reduced, or phased out, in the following situations:

  • Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $156,000. You can't make a Roth IRA contribution if your modified AGI is $166,000 or more.
  • Your filing status is married filing separately, you lived with your spouse at any time during the year and your modified AGI is more than zero. You can't make a Roth IRA contribution if your modified AGI is $10,000 or more.
  • Your filing situation is different than either of those described above and your modified AGI is at least $99,000. You can't make a Roth IRA contribution if your modified AGI is $114,000 or more.

If you continue to work after retirement, you can contribute to a Roth IRA so long as you have earned income and your modified AGI is below the thresholds.

Bankrate.com's corrections policy-- Posted: May 15, 2007
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