Roth IRA: Who Can Contribute?

Quick answer: In order to contribute to a Roth IRA, you must have earned income. Single tax filers must have a modified adjusted gross income (MAGI) of less than $144,000; if married and filing jointly, your MAGI must be less than $214,000 for 2022. The amount of money you can contribute per year is based on your income level. 

If you’re planning for your future retirement, chances are you’ve looked into a retirement account to provide for your golden years. While there are many different options to choose from, a common choice that is often provided by employers is a Roth IRA account. 

While looking into this option, you might be wondering who can contribute to a Roth IRA account, what income qualifies, if you need to include your Roth IRA contributions when filing your taxes and how much you might be able to contribute. We’ve compiled the ultimate guide to understanding Roth IRA contributions so that your retirement can be as comfortable as possible. 

Some key takeaways for contributing to a Roth IRA include:

• There are no age limits for opening or contributing to a Roth IRA.
• If your earned income is too high, you might not be able to contribute to a Roth IRA account.
• There are limits to how much you can contribute per year to your Roth IRA account.
• Spouses, retirees and minors can all contribute to Roth IRAs, with certain stipulations. 

What Is a Roth IRA?

A Roth IRA plan is a type of retirement account. Unlike a 401(k) plan, you contribute after-tax dollars to your Roth IRA. These contributions and earnings are able to grow tax-free — the contributions can be taken at any time tax-free, and your earnings can be withdrawn tax-free after the age of 59.5 and after the account has been open for at least five years. 

Who Can Contribute to a Roth IRA?

Anyone can contribute to a Roth IRA, so long as you have earned income with the exception of Spousal IRA rules that allow the spouse without compensation to contribute as long as their spouse has earned income. Examples of earned income include: 

• Wages
• Salaries
• Tips
• Bonuses
• Taxable fringe benefits
• Net earnings from self-employment
• Untaxed combat pay
• Military differential pay
• Taxed alimony

Earned income does not include things such as welfare payments, untaxed alimony, child support, unemployment, workers’ compensation benefits, pensions, Social Security payments or payments from rental properties. 

While there are limits as to what constitutes qualified income that you can  contribute to your Roth IRA, there is no age limit or threshold. This means that, so long as you have earned income, virtually anyone at any age can contribute to a Roth IRA account.  

If a minor is looking to contribute to a Roth IRA account, they will have to open a custodial account to keep their funds safe for the future. However, once someone has turned 18, they are able to contribute directly to a Roth IRA account until whatever age they desire.  

It’s also important to note that if you participate in another qualified retirement plan, such as a 401(k) plan, it has no impact on your ability to contribute to a Roth IRA. In fact, many employers that offer a 401(k) plan also offer a Roth IRA option for you to contribute to. If you have the available income and wish to contribute to both plans, you can do so. 

Income Limits

Although the limits on who can contribute to a Roth IRA account are rather loose, there are more strict limitations on how much earned income you can have to be able to contribute. For 2022, single filers must have a modified adjusted gross income (MAGI) of less than $144,000 in order to contribute. For those who are married and filing jointly, this total must be under $214,000. 

If your modified adjusted gross income is over the listed numbers, you do not qualify for Roth IRA contributions for the given year. It is important to note, however, that the income limits can change, so it’s wise to check back often for updates. 

Contribution Limits

Along with income limits, contribution limits exist with Roth IRA plans. While these limits can seem a little confusing at first, it’s easiest to remember that as your MAGI increases, the amount you can contribute to your Roth IRA account decreases. 

Below is a breakdown from the IRS that depicts the different levels of contribution, depending on your filing status and your modified adjusted gross income amount: 

• Single, married filing separately, or head of household filing status:
  • 2022 MAGI — Less than $129,000
    • Maximum annual contribution: $6,000 ($7,000 if age 50 or older)
  • 2022 MAGI — $129,000 to $144,000
    • Maximum annual contribution: reduced
  • 2022 MAGI — $144,000 or more
    • No contribution allowed 
• Married filing jointly or qualifying widower filing status:
  • 2022 MAGI — Less than $204,000
    • Maximum annual contribution: $6,000 ($7,000 if age 50 or older)
  • 2022 MAGI — $204,000 to $214,000
    • Maximum annual contribution: reduced
  • 2022 MAGI — $214,000 or more
    • No contribution allowed 

One important note: These maximums assume you have earned income either equal to or higher than these levels. If you earned less than the maximum contribution amount, your new maximum contribution amount is the amount of your earned income. 

For example, if your earned income in 2022 is $3,500, the maximum contribution amount that you can make in 2022 to your Roth IRA is $3,500. 

Roth IRA Changes in 2020

Roth IRA rules can adjust and change frequently. From the contribution limits to income limits and even the age that you can contribute, Roth IRA plans have gone through some changes over the years, both major and minor. 

While limit changes can happen yearly, 2020 brought about the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This allowed those impacted by the COVID-19 pandemic a hardship distribution of up to $100,000 without an early penalty fee that those under the age of 59.5 would normally face. 

In addition, owners of these accounts with distributions during this time were given an extended period of time to pay taxes owed on distributions. Instead of the traditional time frame of owing the tax for the total distribution in the current year, owners could spread the distribution over  three years lowering the taxes paid in one year or could repay the withdrawal and avoid the tax completely. 

Roth IRA FAQ

While the above information is a good starting point to understanding the ins and outs of a Roth IRA account, you may have further questions when thinking about this type of plan for the future. 

Can you open a Roth IRA at any age?

While there’s no age limit to open and contribute to a Roth IRA, there are some income and contribution limits that you should familiarize yourself with before deciding if this is the best option for you. 

Who cannot contribute to a Roth IRA?

If you do not have earned income, or if your earned income amount surpassed the limit for your filing status, you cannot contribute to a Roth IRA account for that year except in the case of spousal IRAs where only one spouse has earned income

Can you withdraw from a Roth IRA at any time?

While you can withdraw your contributions at any time from your Roth IRA account without tax or penalty, there are some stipulations on taking a distribution on your earnings without tax or penalty:

• You must be age 59.5 or older
• Your Roth IRA account must be five years old

If you decide to withdraw your earnings before both of these conditions are met, you may be subject to a 10% early withdrawal penalty on your earnings withdrawn as well as taxes at your current tax rate. 

Can retirees contribute to a Roth IRA?

If you are retired, you can still contribute to your Roth IRA account indefinitely, with a few stipulations: You cannot contribute an amount higher than your earnings, you must still be receiving earned income and you can still only contribute up to the annual contribution limits. 

Can a spouse contribute to a Roth IRA?

With a spousal IRA, a working spouse can contribute to an IRA in the name of their spouse who either has no or little income. It’s important to note that the working spouse’s income must equal or exceed the total IRA contributions made for both spouses.

These accounts are not joint accounts; each Roth IRA account is set up individually. The spouse who hasn’t earned taxable income can also contribute $6,000 ($7,000 if 50 or older) as long as the other spouse did. For 2022, couples who are married filing jointly can contribute up to $12,000 a year, or $14,000 if 50 or older. 

Do I need to claim my Roth IRA distributions on my taxes? 

Although you do not report your Roth IRA distributions on your income tax returns, you should keep some record of your distributions. This will help you demonstrate that you’ve met the five-year period for taking a tax-free distribution of earnings. 

For every year that you make a Roth IRA contribution, the bank or trustee that the account is through will send you a Form 5498. On this form, box 10 will list your Roth IRA contributions for that tax year. 

When considering who can contribute to a Roth IRA account, it’s important to recognize that as long as you make earned income under the income limits, you can contribute to grow your future nest egg. Don’t worry about knowing these tax rules.  You can come to TurboTax and fully hand your taxes over to a TurboTax Live tax expert available in English and Spanish and get your taxes done from start to finish. All from the comfort of your home, making the process of contributing to and withdrawing from your Roth IRA account a seamless one.