If you're still working, you can contribute the full amount of your salary deferral to a Roth 401 (k), regardless of your age. For starters, custodians holding IRAs aren't required to accept contributions from savers over 70 and a half years old, according to new guidance from the IRS. Those who do so must modify their IRA contracts. Customers who are still working after age 70 and a half can generally continue to contribute to employer-sponsored 401 (k) accounts and SEP IRAs.
In fact, employers must continue to make employer contributions to the SEP IRA of an employee over 70 and a half years old if they make similar contributions to the accounts of younger employees. People who are committed to making those tax-deductible contributions to the IRA and want to continue donating to charities through charitable distributions can also contact their spouse. However, you can make new contributions to your current employer's 401 (k) plan after you turn 70½, and you can make new contributions to a Roth IRA at any age, as long as you have earned income from work. There are no joint IRAs, so one spouse can make a deductible contribution to their own account, while the other makes a charitable distribution, Slott said.
If you want to save in your 70s, it would be best to avoid those tax-deductible IRA contributions altogether, Slott said. Since both are over 70 and a half years old, they can't contribute to traditional IRAs, but they can contribute to a Roth IRA. If you continue to work, you can avoid the required minimum distributions and continue to make contributions to your 401 (k) or SEP IRA account sponsored by your employer. Converting money into a Roth account doesn't allow you to make the minimum distribution required for that year: the IRS considers the first money you withdraw from your IRA to be the minimum distribution required before making the conversion (and your RMD is based on the balance at the end of the previous year).
The Security Act complicates this strategy for people who want to continue saving on their IRA after 70 and a half years, but who also want to make those charitable distributions with their accounts. In addition, contributing to an IRA at this age can have unexpected planning implications, such as changing your charitable giving strategy. That is, the Security Act now allows people over 70 and a half years old to make tax-deductible contributions to an IRA. The rules for contributing to an IRA after 70 and a half years depend on whether the account is a traditional IRA, a Roth IRA, or an SEP IRA.
This savings and investment account allows you to contribute wage deferral contributions as an employee. In this case, they make non-deductible contributions to the IRA and then convert those sums into a Roth IRA, Slott said. Age and employment status affect the minimum required distributions and the ability to contribute to IRAs and 401 (k), etc. Direct contributions to a traditional IRA are not allowed after the client turns 70 and a half years old, although the client can transfer funds from another type of retirement account to their traditional IRA.