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Tax-advantaged retirement accounts such as traditional and Roth IRAs are important tools for retirement planners accumulating wealth to provide for a secure retirement. And, under the right circumstances, individuals can continue to take advantage of these tax benefits by contributing to traditional or Roth IRAs after they have retired. The key requirement for contributing to a traditional IRA is that the retiree has to have some earned income. Roth contributions by retirees, meanwhile, are subject to income caps. It’s also wise to be aware of the five-year rule that could affect Roth withdrawals.
Have questions about maximizing your IRA contributions or creating a retirement plan? Consider working with a financial advisor.
Traditional vs. Roth IRAs
A traditional IRA allows individuals to make pre-tax contributions, meaning that contributions are often tax-deductible in the year they are made. The money in the account grows tax-deferred, and taxes are paid upon withdrawal during retirement. This type of IRA is popular among individuals who expect to be in a lower tax bracket during retirement, as it allows them to defer paying taxes until they potentially have a lower taxable income.
A Roth IRA operates on an after-tax contribution basis. This means that contributions are made with money that has already been taxed, so withdrawals during retirement are generally tax-free (provided certain conditions are met). The main advantage of a Roth IRA is the tax-free income it provides during retirement. This can be helpful for retirees who expect to be in a higher tax bracket in the future, or those who want to avoid taxes on their retirement withdrawals.
Contribution Limits
Both retired and pre-retirement savers face contribution limits on these accounts. For 2026, the contribution limit is $7,500. If you are age 50 or older, you’re allowed $1,100 in catch-up contributions, bringing the total contribution limit to $8,600.
Note that these limits apply across both types of IRAs. So if you contribute to both a traditional and a Roth IRA, the total combined contributions cannot exceed your limit.
Can Retirees Contribute to a Traditional or Roth IRA?
While traditional IRA and Roth accounts are primarily intended and used to save up for retirement, retirees can continue to contribute to traditional and Roth IRAs as long as they have earned income. This is a new development in the last several years. Previously, traditional IRAs only allowed for contributions up to the age of 70 ½, but the SECURE Act of 2019 removed this age limit. The change permits the continued growth of retirement funds and, in the case of Roth IRAs, the ability to withdraw contributions tax-free in the future.
Earned income includes wages, salaries, bonuses and income from self-employment. It does not, however, include income from pensions, Social Security benefits or investment returns. This means that retirees who have part-time jobs, freelance work or other sources of earned income can continue to bolster their retirement savings by contributing to these accounts.
What Is the Five-Year Rule?
The five-year rule is one to keep in mind if you are saving using a Roth account. It dictates that in order to withdraw earnings from a Roth IRA tax-free, the account must have been open for at least five years. This rule applies regardless of the account holder’s age.
For example, if you first contributed to a Roth IRA in 2025, you wouldn’t be able to withdraw earnings tax-free until 2030, even if you are over age 59 ½. This five-year rule is based on the first year you contribute to any Roth IRA set up for your benefit, so opening a new Roth IRA later does not create a new waiting period for qualified distributions of earnings.
A separate five-year rule also applies to Roth conversions, which you can do even if you have no earned income in retirement. If you convert funds from a traditional IRA to a Roth IRA, a new five-year period begins for the converted amount. Withdrawing converted amounts before the five-year period ends could result in taxes and penalties.
See how contributing to a pre-tax retirement account could affect your tax bill. Use our income tax calculator to estimate your savings.
Income Tax Calculator
Calculate your federal, state and local taxes for the 2025 tax year.
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About This Calculator
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
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First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
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Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer.
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Based on your filing status, your taxable income is then applied to the tax brackets to calculate your federal income taxes owed for the year.
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Your location will determine whether you owe local and / or state taxes.
When Do We Update? - We check for any updates to the latest tax rates and regulations annually.
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Assumptions
Deductions
- "Other Pre-Tax Deductions" are not used to calculate state taxable income.
Credits
- The only federal credit automatically calculated is the Savers Credit, depending on your eligibility.
- We do not apply any refundable credits, like the Child Tax Credit or Earned Income Tax Credit (EITC).
- We do not apply state credits in our calculations.
Itemized Deductions
- If itemizing at the federal level, you may need to itemize at the state level too. Some states don't allow itemized deductions, which is accounted for in our calculations.
- When calculating the SALT deduction for itemized deductions, we use state and local taxes, and we assume your MAGI.
- We assume that there is no cap to itemized deductions, if a state allows them.
- We do not categorize itemized deductions (such as medical expenses or mortgage interest), which could be subject to specific caps per state.
Local Tax
- Depending on the state, we calculate local taxes at the city level or county level. We do not include local taxes on school districts, metro areas or combine county and city taxes.
- With the exception of NYC, Yonkers, and Portland/Multnomah County, we assume local taxes are a flat tax on either state taxable income or gross income.
Actual results may vary based on individual circumstances and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee income tax amounts or rates. Past performance is not indicative of future results.
SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.
Frequently Asked Questions (FAQs)
Can a retiree contribute to a traditional IRA if they only have investment income?
No, contributions to a traditional IRA require earned income. Investment income, such as dividends, interest and capital gains, does not qualify as earned income and therefore cannot be used to make IRA contributions.
Is there an income limit for retirees contributing to a Roth IRA?
Yes, Roth IRA contributions are subject to income limits. For 2026, single filers with a modified adjusted gross income (MAGI) below $153,000 and married couples filing jointly with a MAGI below $242,000 can make a full contribution to a Roth IRA. Those with incomes slightly above these thresholds may be eligible for reduced contributions.
Can a retiree who is over 70 ½ contribute to a traditional IRA?
Yes, under the SECURE Act of 2019, there is no longer an age limit for making contributions to a Traditional IRA, as long as the individual has earned income.
What happens if a retiree contributes to an IRA without earned income?
Contributing to an IRA without earned income could result in penalties from the IRS. The contribution would be considered excess, and the retiree would need to withdraw the contribution amount and any associated earnings to avoid a penalty.
Bottom Line
As long as retirees have earned income, they can continue to contribute to these retirement accounts, allowing for potential growth and tax benefits even after they’ve left the workforce. However, you’ll want to be mindful of the eligibility requirements for contributions, as well as the five-year rule for Roth IRAs. Whether you’re considering a contribution to a traditional or Roth IRA, you can also consider consulting with a financial advisor to ensure you’re making the best decisions for your individual situation.
Retirement Planning Tips
- A financial advisor can help you analyze and manage investments for your retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Any returns you see in a Roth IRA account depend on the investments you put your assets into. On average, here’s how much you could earn.
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