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fasteddie577
fasteddie577
Level 6
November 23, 2020
Question

IRA

  • November 23, 2020
  • 2 replies
  • 8 views

I am 63 years old and took my social security early. Can I still open an IRA to defer some taxes? Thank you. 

2 replies

DoninGA
Level 15
DoninGALevel 15
Level 15
November 23, 2020

You can open an IRA if you have taxable compensation from working.

Go to this IRS website for IRA information - https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

fasteddie577
fasteddie577Author
Level 6
November 23, 2020

Thank you. 

Critter-3
Critter-3
Level 15
November 23, 2020

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

For 2020, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or
your taxable compensation for the year.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355

    Critter-3
    Critter-3
    Level 15
    November 23, 2020

    Yes if you still have wages or self employment income ...  SS benefits do not count as qualifying earned income.

    fasteddie577
    fasteddie577Author
    Level 6
    November 23, 2020

    My income besides SS is my pension and interest income. Does this mean I cannot open an IRA? 

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