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Case of the Week: No More Age Restriction for Traditional IRA Contributions

ERISA advisors from the Resource Education Center Resource regularly receive calls from financial advisors on a wide range of technical topics related to IRAs, qualified retirement plans and other types of retirement savings plans. We bring you the case of the week to highlight the most relevant topics that affect your business.

A recent call by a New York advisor is a common issue related to making traditional contributions to the IRA. The counselor asked:

“My client is 80 years old and still working. He wants to put money aside for that when he wants could to back off; however, she does not have access to a workplace retirement plan. Is the IRA an option? ”

We single out from the discussion

More power for your client! You bet; The IRA is an excellent option. Of course, the most prudent procedure is to encourage your client to discuss their contribution options with their tax advisor.

Provided your client has the appropriate amount of income earned to support him, he could contribute to the Roth IRA or – due to a key change in the law – could contribute to the traditional IRA. It could even be a combination of Roth and traditional IRA contributions provided it does not exceed a maximum contribution of $ 7,000 for a person aged 50 or over between the two accounts. I, whereas the IRS has granted a special postponement of the normal tax filing deadline of 15 April,[1] it could still make an IRA contribution for 2020 (Roth or traditional) by May 17, 2021!

Before 2020, after a person turned 70, they could no longer contribute to a traditional IRA. This rule has changed for 2020 and later years as a result of the 2019 Community Setting for Every Pension Improvement Act (SECURE) (see TITLE I, section 107 Further consolidated law on appropriations from 2020). The SECURE Act removes the age limit for eligibility for a traditional IRA contribution. Roth IRA contributions have never had a maximum age limit, but are subject to a maximum earnings limit. Consequently, for 2020 and beyond, the only requirement to be able to create a traditional or Roth IRA refers to a change in adjusted gross income (MAGI) for the year – enough to give either a traditional contribution or a Roth IRA contribution, but not too much in the case of Roth’s contribution to the IRA.

As for the issue of deduction, since your client does not participate in the workplace retirement plan, any traditional IRA contribution she chooses can be tax deductible. (Active participation in a retirement plan may affect whether a traditional IRA contribution is tax deductible. For details, see the case of the week of April 7, 2021: Active participation can affect the reluctance of the IRA.)


Recognizing that more and more people are working after the 1970s and may want to continue saving for retirement, Congress felt the need to abolish the age limit for traditional IRA contributions, effective for 2020.

All information provided is for informational purposes only. It cannot be used for the purpose of avoiding fines and taxes. Consumers should consult with their tax advisor or solicitor regarding their specific situation.

© 2021, Retirement Learning Center, LLC. Used with permission.