Are there Age Limits for Roth Ira Contributions?

As long as you are earning taxable income, you can make contributions to a Roth IRA, regardless of your age. [1] There are no official minimum or maximum age limits on making contributions to a Roth IRA. This feature gives younger and older investors the opportunity to invest the money they've earned and accrue earnings at a tax free rate. In addition, because there are no mandatory distribution requirements for Roth IRAs, you may continue to leave your assets in holding and allow them to grow long after you retire.

Minimum Age Limits

There is no minimum age limit on when an investor may begin making contributions to a Roth IRA. As long as the trustee or custodian that holds the account will allow a minor to open a Roth IRA, a child or teenager may make contributions from post tax income. Eligible income may include wages from summer jobs, tips, bonuses or fees for mowing lawns or performing other chores.

The income that a minor contributes to a Roth IRA must be taxable income, regardless of whether the child or teenager actually owes taxes on the money. If a child's annual earnings are less than the minimum income tax threshold, he or she may still contribute these funds to a Roth IRA, as long as the money qualifies as an eligible source of taxable income. For instance, if a 16-year-old earns $1,500 babysitting during the year, she may contribute all or part of this money to a Roth IRA, even though she hasn't earned enough to owe income tax.

Like adults, minors are subject to the maximum annual contribution limits for Roth IRAs. As of 2012, the maximum contribution limit is $5,000 per tax year for investors under the age of 50. A minor may not contribute more than $5,000 to a Roth IRA.

Contributing to a Roth IRA may have significant advantages for minors. The money invested in a Roth IRA will have even longer to earn at a tax free rate if you begin to invest in your teens. Although you may not withdraw from the earnings from a Roth IRA until you meet the IRS eligibility requirements, you may withdraw money from your contributions.

Maximum Age Limits

You may continue to contribute to a Roth IRA as long as you like, as long as your contributions meet the IRS requirements. A retired adult who continues to provide consulting services, runs a home based business or works at a part time job might decide to continue to contribute to a Roth IRA from aftertax income in order to continue to accumulate funds for the future. Taxable alimony and maintenance payments also qualify as eligible contributions. If you inherit a Roth IRA from a deceased spouse, you may roll over the assets into your own account.

Many retirees use their Roth IRA to provide a legacy for their adult children or grandchildren. While a traditional IRA requires mandatory distributions when you reach the age of 70 1/2, a Roth IRA has no such requirement. You can begin taking eligible distributions from a Roth IRA at the age of 59 1/2, but you are not required to withdraw assets from your account at any age.

At the age of 50, the annual maximum contribution limit for a Roth IRA increases from $5,000 to $6,000, provided your income does not exceed the maximum limits established by the IRS. [1] The higher contribution limit gives older adults the opportunity to accelerate their retirement savings goals. The flexibility of a Roth IRA can be advantageous for investors of all ages.

http://www.irs.gov/publications/p590/ch02.html#en_US_2011_publink1000230977 02/23/2012

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