Can you contribute to an ira after age 70

Contributions must be supported with earned income. For example, Jim and Jane are 73 years old, married, and filing jointly. Jane no longer works, but Jim works part time as a driver for a dealership. Many choose to contribute to a Traditional IRA to receive a federal income tax deduction. Whether they qualify for a deduction depends on their retirement plan participation status and the amount of their income.

Be careful not to confuse Traditional IRA contribution eligibility with deduction eligibility. See Publication A for certain conditions that may allow you to avoid including withdrawals of excess contributions in your gross income.

More In Retirement Plans. Danny's grandmother can make the contribution on his behalf. Sarah, age 50, is married with no taxable compensation for Make an improper rollover contribution to an IRA. So, the floodgates are now open to traditional IRA contributions later in life. But if you can make an IRA contribution, should you? Or would you be better off saving in a taxable account instead?

Generally speaking, the longer the holding period, the greater the tax benefits of utilizing any type of tax-sheltered savings vehicle. Young accumulators, for example, have many years to benefit from the tax-deferred compounding on their money. Not only can they stash away assets without paying taxes on them, in the case of deductible contributions, but they won't owe any taxes on the money on a year-to-year basis, either. In the case of Roth contributions, they'll benefit from tax-free compounding in the years leading up to retirement, and will also be able to take tax-free withdrawals on the account in retirement.

The longer the holding period, the greater the appreciation and the greater the tax-saving benefit of using some type of tax-sheltered wrapper. Contributions to IRAs made later in life benefit less from the tax-sheltered compounding than do early contributions simply because of a domino effect: With a shorter time horizon, the investment gains are less, and so are the taxes due upon them. Taking advantage of IRAs for additional savings later in life carries tax benefits and will often be preferable to investing in a taxable brokerage account for older adults who have earned income, but those tax benefits will tend to be modest.