If lower, your taxable compensation for the year. You can open an IRA at any age, but you need to earn income to contribute to it. A 16-year-old with a part-time job can open an IRA and start contributing, but a 20-year-old full-time student with no income cannot make any contribution to the IRA. Keep in mind that minors can only open custodial IRAs, so they'll need the help of an adult to use them until they reach the minimum legal age for investing (usually 18, but it depends on state law).
Just as you can only contribute to your IRA until you reach a certain age, most IRAs impose the required minimum distributions (RMDs) once you turn 70.5 or 72, depending on your date of birth. Some retirees mistakenly believe that they cannot open an IRA account and then transfer their 401 (k) global pension distribution plan or 401 (k) plan to an IRA because, under old rules, they have exceeded the IRA age limit. In 2022, those adjustments will make a big difference in who can contribute to a Roth IRA and who can deduct their contributions to a traditional IRA from their taxable income. In addition, you should receive the required minimum distributions (RMDs) from your IRA after age 72, according to the IRS life expectancy tables.
However, they do apply to designated Roth accounts offered in a 401k plan and also apply to legacy Roth IRA accounts. People who juggle multiple IRA accounts or who set automatic contributions that are too high could end up investing too much money in a Roth IRA or a traditional IRA. Instead, a contribution is new money that wasn't previously in a tax-deferred account and is now depositing in an IRA. If you don't have taxable compensation but file a joint return with an earning spouse, you can open an IRA in your name and make contributions through a spousal IRA.
So it's important to know how early and late in life you can start accumulating money in your traditional IRAs and Roth IRAs. Keep in mind that those who are 70 and a half years old or older and make contributions to a traditional IRA, a SIMPLE IRA, or an SEP IRA will continue to have to apply for an RMD, even if they are still working. The timing of IRA contributions can determine how much they will increase over time and how much you'll need to use when you retire.
