topic Eligibilty for IRA in Retirement tax questions

Eligibilty for IRA

JJ2023 — Mon, 23 Feb 2026 12:53:50 GMT

Hello. I am retired since February 2021. My employment prior to retirement did offer the option of a 452 or 457 account, in which I participated. Upon retirement, they were all converted to IRAs. I did not work again until January 2022, and then as an independent contractor. My new position does not have the option to join in a 401K or another retirement plan. Thus, can I contribute to an IRA for 2022, while taking RMDs from an existing IRA/457/452 account? The 2022 Turbo Tax software says I qualify, but I just want to be sure!!! Also, can you contribute the maximum to the IRA if you earned less than the $7,000--this applies to my spouse but not me, as I earned more than that.

Re: Eligibilty for IRA

Opus 17 — Fri, 10 Feb 2023 01:08:12 GMT

Your IRA contribution is limited to your compensation from working. If you are self-employed, your compensation is considered to be 92% of your net income (which is your net income minus half your self-employment tax). Using the spousal, IRA rules, your spouse can rely on your compensation to make a contribution, but your contributions are still limited by your total compensation. For example, if you have $10,000 in compensation, you could contribute $7000 to an IRA and your spouse could contribute $3000.

Because of reforms in the SECURE act, you are allowed to make new IRA contributions even if you are over age 72, as long as you have compensation from working.

Re: Eligibilty for IRA

ErnieS0 — Fri, 10 Feb 2023 01:20:30 GMT

If you’d like to contribute more, as a self-employed person, you can contribute to a Simplified Employee Pension Plan (SEP).

This is a tax-deferred contribution, so you will get a 2022 tax deduction.

You can open a SEP account as late as the due date (including extensions) of your business's income tax return for that year.

Learn more at SEP Plan FAQs

Re: Eligibilty for IRA

JJ2023 — Fri, 10 Feb 2023 05:40:14 GMT

Thank you! One final question. Do I have to open a new IRA or can I add it to my existing one?

Re: Eligibilty for IRA

Opus 17 — Fri, 10 Feb 2023 13:03:34 GMT

@JJ2023

You may contribute to an existing IRA if you like.

Note, however, that an SEP IRA is a different kind of plan and would require opening a new account. The SEP IRA is an interesting idea because it has a much higher contribution limit than a traditional IRA, but you can only contribute 25% of your net earnings. So, whether an SEP IRA makes sense depends on your actual self-employment income.