May 2021 Question Of The Month

By Admin Prepare

May 18, 2021

“Hello. I retired last year. Am I able continue to fund an IRA? Thank you.” Elaine

Hi, Elaine. In order to be able to contribute or fund an IRA or other type of retirement account, you must meet some guidelines to qualify. The first and foremost guideline is that you must have earned income. Earned income is any income that is received from a job or self-employment in the form of wages, salary, tips, bonuses and commissions. Unearned income, which consists of many sources such as interest, dividends, pensions, annuities and Social Security income does not count. If you have earned income, you can contribute to an IRA at any age, up to the annual IRS-set contribution limits, but not to exceed your earnings.

If you want to contribute to a traditional IRA and get a tax deduction for your contribution or contribute to a Roth IRA, your earned income must be below the IRS phaseout amounts. If you make too much money to be able to deduct your contribution, you can contribute to a non-deductible IRA.

Also, if you have earned income and you are married to someone who does not have earned income, then you can also contribute for them. Many people do not realize this and miss out on being able to save more for retirement. For example, let’s say your earned income for the year is $20,000, and your spouse does not work, then you could contribute up to the maximum amount in your name and also up to the maximum amount in your spouse’s name.

There are also other ways to save for retirement besides IRA accounts. The key to retirement savings is making sure you are saving the proper way and in the proper types of accounts that are best for your specific situation.

To learn more about saving for retirement the most proper and tax efficient way, visit the Prepare Institute website ( to find a retirement course or class near you.

Content is for educational and informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should contact your retirement and tax professional before utilizing any of the information in this article.