If lower, your taxable compensation for the year. If you fund your IRA after you retire, you should consider the maximum contribution limits. In 2022, those adjustments will make a big difference in who can contribute to a Roth IRA and who can deduct their contributions to a traditional IRA from their taxable income. For example, you can participate in an employer-sponsored 401 (k) plan, you can fund your own individual retirement account (IRA), or both.
Putting your money in an IRA when you've retired may mean keeping it for a certain period of time. If you or your spouse are covered by an employer-sponsored retirement plan and your income exceeds certain levels, you may not be able to deduct your full contribution. Your total contributions to your IRA and your spouse's IRA cannot exceed your combined taxable income or the annual IRA contribution limit multiplied by two, whichever is less. For traditional IRA contributions, the amount you can deduct may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels.
The main benefit of contributing to your IRA during retirement is that you'll be accumulating your savings. A requalification allows you to treat a regular contribution made to a Roth IRA or a traditional IRA as if it had been made to another type of IRA. The accounts you have during your retirement will also influence how you plan for that key time in your life. It's possible to continue contributing to a traditional IRA even if you're officially retired, but you're still working or providing services of whatever type you're paid for and you can document or file on your tax return.
An IRA (and its corollary, the Roth IRA) is a tax-advantaged form of retirement account that allows you to save money during your working years so that you can withdraw it during retirement. Setting aside and budgeting your IRA contributions during retirement can help you reduce other expenses. If you deposit funds into a Roth IRA after you retire, you can allow your savings to grow tax-free because it brings you after-tax money. If you do so before the deadline for filing your tax return (including extensions), you can consider the contribution as if it had been made to the second IRA of that year (practically ignoring the contribution to the first IRA).
No matter how old you are, you can continue to contribute to your Roth IRA as long as you earn income, whether you receive a salary as a staff employee or 1099 income from contract or self-employment.