Hi everyone, just wanted to run this question through the board. I’m 60 years of age, don’t work and I am collecting SSDI. Can I contribute to my Roth IRA? Thank you in advance for your help.
Just to add, I do get about $4K a year for renting out some farmland.
I don’t see why not, but at 60, why? Okay, I’m a little feaisty at the moment, so I cannot think of a reason you cannot do this.
The beauty of a Roth IRA is chunking $$ into it when you are young. If you do the math, the increases dwarf the principle. And, usually, you are in a low tax situation. So, look long and short term.
You must have income from a job: taxable compensation, such as wages, salary, tips, bonuses, or professional fees.
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My understanding is that you must have earned income to contribute to any IRA.
But you can do Roth conversions on any pre-tax accounts you have.
I’m currently doing that for my IRAs and 403b.
Years ago, the advice was to do the pre-tax contributions because you’ll be in a lower income tax bracket when retired.
Not true for me! I’m in the same bracket as if I were working.
I think that applies to high earners in a higher bracket, not regular earners like me!!
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I also, believe that you need “earned income” to contribute to an IRA, but you’ll need to check with the IRS, or your CPA as to what exactly that is. But, the idea was you’d be in a lower tax bracket, but that was like 40 years ago and they have made so many changes and in the process of raising takes now. I’m 71 and I still try to put money into a Roth. Depending on how the election goes your taxes may go up hugely. They do t have to raise the actual rates, they play games with the criteria, like changing the level of SS money that is taxable, when SS was never meant to be taxable. I would say to put as much in a Roth as you can and as early as you can. Taxes aren’t going down and staying down.
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To contribute to a Roth or traditional IRA, the IRS says you must have earned income. Earned income includes all of the following types of income:
- Wages, salaries, tips, and other taxable employee pay. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below.
- Net earnings from self-employment.
- Gross income received as a statutory employee.
Nontaxable combat pay election. You can elect to include your nontaxable combat pay in earned income for the earned income credit.
Net earnings from self-employment. You may have net earnings from self-employment if:
- You own your business, or
- You are a minister or member of a religious order.
Farm income is a type of self employment, but farm rental income may not qualify, unless you can re-characterize it with your tenant to be “income from farming”. Instead of rent, hire your friend to work for you and he pays you the same amount that you now get for farm rent. This could be risky, but the only way you will get new money into a Roth. Old money already in a tax-deferred account can be converted to a Roth with no problems.
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Thanks for the help, it looks like you are right on.