Ask Terry Questions Roth IRA at age 72

Roth IRA at age 72

By Terry Savage on March 17, 2019 | Financial Planning / Retirement

I am age 72 and still full time employed. My husband is 76 and retired. I contribute to a 457 plan through my employer. I am planning to retire in a year or two (maybe three.) I know that does not give me a lot of time to invest in a Roth. I have some $$ to invest that are just “sitting in the bank” collecting close to 0%. Would I make sense to put money in a Roth IRA? If so, could I still put in for 2018 and put in the maximum allowed? If so, what type of Roth should I invest in? Thank you Terry for your answer.

Terry Says

Yes and no!  Yes, you can contribute to a Roth IRA if you have earned income to cover that contribution, which for 2018 would be $ 6500 since you are over 50.  (Next year the limit for over 50 jumps to $7,000.) And yes, you can still make a contribution until the April 15th tax deadline.  And yes, you can contribute even though you are contributing to an employer benefit plan.

BUT — there are income limits for contributions to a Roth at any age!  Here are the income limits for 2018:    If you are single, you must have a modified adjusted gross income under $135,000to contribute to a Roth IRA for the 2018 tax year, but contributions are reduced starting at $120,000. If you are married filing jointly, your MAGI must be less than $199,000, with reductions beginning at $189,000.

If you meet those criteria, simply go to Vanguard or Fidelity and open a Roth now.  Depending on your risk tolerance they will recommend an appropriate fund.  My suggestion would be an equity/income fund — reasonably conservative.   Since you don’t have to make withdrawals from a ROTH,  you have a longer-term time horizon.  Be sure to name a beneficiary who can stretch out this IRA after your death if you don’t use the money.

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