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Who Can Get A Roth IRA?

Who can get a Roth IRA?

You need to know the answer to this question, especially if you plan on opening a Roth IRA for yourself or someone in your immediate family.

So who can get a Roth IRA?

Well, anyone can open and fund a Roth IRA, if...

They meet the eligibility requirements.

Common eligibility factors include...

  • Source of Income
  • Income Level

While factors which do NOT hinder your eligibility include...

  • Age
  • Additional Retirement Plans
  • Past Roth IRA Conversions

So, as long as you have the right sources of income and you earn below the threshold for making an annual contribution to a Roth IRA, then you can open a Roth. You aren't automatically disqualified on the basis of age, current participation in a similar employer backed retirement plan, or a past Roth conversion.

Source of Income

Before you can even consider getting a Roth IRA, you need earned income.

An even better way of saying that is you need compensation income.

What's compensation income?

Generally speaking, it's money someone paid you in return for something you provided.

Need an example?

Let's say you work 20 hours per week making lattes at the local Starbucks. The money Starbucks pays you to work those 20 hours is compensation income. You earned it.

Does that make sense?

You got paid in return for something you provided... In this case, your labor. But you can also provide intellectual property, consulting advice, or other services in exchange for compensation pay.

At this point, you might say...

But isn't all income earned?

The answer, of course, is NO.

At least, not as far as the IRS is concerned.

Let's take another example...

Say you got a job at the very first Starbucks, and as a result, you received stock options for your services. Years ago, you sold the stock options and retired to Palm Beach, Florida. You receive a steady stream of dividends and interest from your investments.

Can you get a Roth IRA?

Unless you supplement your investment income with some sort of earned income, the answer is no.

You can't fund a Roth IRA with non-earned income.

So what types of income are excluded from funding your Roth?

Income from passive sources, such as social security payments, disability checks, defined benefit pensions, other retirement accounts, interest income, dividend income, rental property income, etc.

While there's no doubt you earned the assets which now generate your passive income, you earned those assets in past years. And only compensation income from the present tax year can be used to fund your Roth IRA.

As a general rule of thumb, think about the following...

During the course of the year, did you provide brain power or physical labor to earn money you otherwise wouldn't have earned?

If so, then it's probably compensation income.

If not, then it's probably passive income.

And if you get a Roth IRA, only earned income can fund it...

Income Level

While you aren't forced to close an existing Roth IRA if your income level in any given year surpasses a predetermined threshold, you may be prohibited from making an annual contribution if you earn too much money during the tax year.

So what's considered too much income?

The limit varies depending on your tax filing status.

But under the law, you can NOT make any Roth IRA contribution this year if...

1) You're married, file a joint tax return, and earn $176,000 or more.
2) You're married, file a separate tax return, lived with your spouse at any time during the course of the tax year, and earn $10,000 or more.
3) You file your tax return as single, head of household, or married filing separately (and did not live with your spouse at any time during the course of the tax year), and you earn $120,00 or more.

If you earn more than the income limits outlined above, then you can NOT contribute to your Roth IRA in the current tax year.

If you earn less than those income limits, your maximum Roth IRA contribution limit varies depending on your age and the exact amount of your adjusted gross income (AGI). For more information, see Roth IRA income limits.


Fortunately, the federal government places no age limits on who can or can't contribute to a Roth IRA.

You can get a Roth IRA regardless of age as long as you have earned income and your earned income doesn't exceed the Roth IRA income limit.

For example, a Traditional IRA requires you start taking regular distributions at age 70 ½. But in the case of a Roth IRA, you can open and fund your Roth account starting at age 73 if that's what you want. Or age 83 or 93 for that matter...

All you need to qualify is earned income below the maximum threshold.

So age itself does NOT effect your ability to get a Roth IRA.

However, age does impact the amount you can contribute to your Roth IRA.

How's that?

In an effort to encourage workers nearing retirement to save more and make "catch up" contributions, the IRS allows workers over 50 years old to contribute more to a Roth IRA.

So if you're 50 years old or older, your maximum Roth IRA contribution limit is $6,000 per year. But if you're 50 years old or younger, then your maximum contribution limit is $5,000 per year.

In this sense, age does play a role in your ability to fund your Roth IRA.

But what it doesn't effect is your ability to get a Roth IRA...

Additional Retirement Plans

Some retirement accounts remain closed to individuals who already participate in an employer-sponsored retirement plan. But that's not the case with a Roth IRA...

Regardless of whether or not you currently participate in a 401k plan, a 403b plan, a Traditional IRA, a SEP IRA, a defined benefit pension plan, or most any other retirement plan, you can still open and fund a Roth IRA.

So don't worry about your participation in an existing retirement plan impacting your ability to contribute to a Roth IRA.

You can still get a Roth IRA as long as you have earned income and you meet the previously discussed income limits.

Past Roth IRA Conversion

If you converted a Traditional IRA to a Roth IRA at sometime in the past, you can still open and fund a Roth IRA.

Nothing but meeting the earned income requirements bars you from making regular contributions to your Roth IRA conversion or to a separate Roth IRA custodial account.

So if you've made a Roth IRA conversion in the past, don't worry. You can still get a Roth IRA.

Do You Qualify? Get a Roth IRA!

So who can get a Roth IRA?

Anyone! As long as they have...

  • Earned income
  • Earned income below the maximum limit

If you have earned income and your earned income is less than the maximum limit for your tax filing status, then you can get a Roth IRA.

Nothing else prohibits you from getting a Roth. Not your age, your existing retirement plan, a past Roth IRA conversion, or anything else.

So if you don't have a Roth IRA or you think your wife or teenager should have one, don't miss the opportunity to start investing in your retirement nest egg.

Get a Roth IRA today!

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