The timing of your IRA contributions can determine how much your retirement savings will grow over time and how much money you’ll have 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.

No Maximum Age Limit for IRA Contributions

Traditional IRA: For a traditional IRA, as of Jan. 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, but you must have taxable compensation.

No IRA Age Limit on IRA Rollovers or Transfers

Don’t confuse IRA contributions with IRA rollovers or transfers. Some retirees mistakenly believe that 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. That 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 Jan. 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, if 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.

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. However, ordinary income taxes will still apply. If you withdraw funds prior to age 59 1/2, you’ll incur a 10% early-withdrawal penalty tax, and the withdrawal amount will be subject to federal income taxes. On the other hand, with Roth IRAs, you can withdraw your contributions at 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 Jan. 1, 2020): That 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), and RMD 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 to Roth IRA accounts that are inherited. However, there are two factors to consider. First, if you withdraw all of your funds early on in retirement, then you won’t have any savings for the rest of your life. Second, if you’re withdrawing from a traditional IRA, you will owe income taxes, so consider those costs as you calculate withdrawals. In 2022, the contribution limit is $6,000, and if you’re 50 and older, $7,000, including the $1,000 catch-up contribution. In 2023, the contribution limit is $6,500 and $7,500, including the catch-up contribution. Keep in mind that minors can only open custodial IRA accounts, so they’ll need the help of an adult to use an IRA until they reach the minimum legal investing age (usually 18, but it depends on state law).