Can I Open an IRA if I'm Retired?

by Amanda McMullen

To plan for their retirement, many people contribute a portion of their earned wages to individual retirement arrangements, better known as IRAs. Retiring from your job does not prevent you from opening a new IRA or contributing to an existing account. However, you cannot open a new IRA or make contributions without a qualifying source of income.

About IRAs

An IRA is an investment account created to save money for your retirement. You can invest the balance of the IRA in mutual funds, stocks or certificates of deposit. Any income your account earns is tax-deferred, which means that it is automatically reinvested without incurring income tax. Most IRAs are either traditional IRAs or Roth IRAs. While a traditional IRA offers tax-deductible contributions, a Roth IRA does not. However, distributions from a Roth IRA are tax-free, while distributions from a traditional IRA are not.


To contribute to either a Roth or a traditional IRA, you must have income that qualifies as compensation. According to the IRS, compensation for the purpose of IRA contributions includes salaries, wages, commissions, alimony, self-employment income and nontaxable combat pay. You can't make contributions using investment income, such as pension payments, annuity income, interest payments or dividends. With the exception of combat pay, the IRS also prohibits taxpayers from contributing non-taxable income to IRAs.

Age Restrictions

You can open a new Roth IRA or contribute income to an existing Roth IRA regardless of your age. However, you cannot open a traditional IRA after the age of 70 1/2. Similarly, the IRS prohibits you from making contributions to a traditional IRA after the age of 70 1/2, regardless of whether you have qualifying income.


If you are retired, under the age of 70 1/2 and still earn income that qualifies as compensation, you can open either a Roth or a traditional IRA. If you are retired and over the age of 70 1/2, you can open a Roth IRA if you earn qualifying income. You can continue to contribute qualifying income to either account until you reach the age of 70 1/2. After age 70 1/2, you can continue to contribute qualifying income to a Roth IRA, but you must stop contributing to a traditional IRA.


If you don't meet the qualifications to open an IRA after retirement, you can invest your money in other securities or accounts. Other investment options for retirees include mutual funds, certificates of deposit, stocks, money market accounts, treasury bonds and annuities.

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