If your earnings from work are too high, you can't contribute at all. You can withdraw tax-free contributions at any time from a Roth IRA. Otherwise, the eligibility rules for Roth IRAs are broad. There is no age limit for opening a Roth IRA, and you can continue to fund this account long after you retire.
You can withdraw any contributions you have made to your Roth IRA at any time, without paying taxes or penalties. However, you may have to pay taxes and penalties on your Roth IRA earnings. If you make a distribution of Roth IRA earnings before you turn 59 and a half years old and before the account turns five, the earnings may be subject to taxes and penalties. For example, those tax-exempt Roth withdrawals during retirement won't contribute to your taxable income, which is used to determine how much you pay for Medicare, including surcharges (also known as monthly income-related adjustment amounts or IRMAA).
Let's review how long you can contribute to a Roth IRA, what are the annual deadlines for making a contribution, and how to maximize your contributions throughout your life. If your income is too high, you are prohibited from contributing to a Roth IRA and you can only contribute to your Roth IRA what you earn in a given year. It's also worth paying attention to the definition of earned income that the IRS uses to determine eligibility for Roth IRAs. Roth IRAs are retirement accounts that allow your savings to grow tax-free, but there are some limitations on how and when you can contribute.
So, if you have the money and meet income limits, you can contribute to a 401 (k) plan at work and then contribute to your own Roth IRA. In addition to the general contribution limit that applies to both Roth and traditional IRAs, your contribution to the Roth IRA may be limited depending on your reporting status and income. For people who work for an employer, the compensation that is eligible to fund a Roth IRA includes salaries, salaries, commissions, bonuses, and other amounts paid to the person for the services they provide. This and other key differences make Roth IRAs a better option than traditional IRAs for some retirement savers; however, Roth IRAs are not available to everyone.
While Roth IRAs are often considered retirement accounts and are most often used this way, there are no limits to who can contribute to them and when (as long as they meet the above income requirements). Finally, keep in mind that if you invest in both a Roth IRA and a traditional IRA, the total amount of money you contribute to both accounts cannot exceed the annual limit. Using this definition of compensation, if your income is above the Roth IRA limit or is zero for a tax year, you won't be able to contribute to a Roth IRA for that year. With a Roth IRA, contributions are not tax-deductible, but profits can increase tax-free, and qualified withdrawals are exempt from taxes or penalties.
If you don't earn anything in a tax year, you won't be able to contribute to your Roth IRA for that year.