You are never too old to make a contribution to the SEP. There is no age limit as long as you work and comply with the plan's eligibility rules. You can make contributions to the SEP even if you are 70 and a half years old or older. A traditional IRA allows investors to make contributions, and you receive a tax deduction equal to the amount of the contribution in the tax year in which you made it.
Leveraging IRAs to save later in life has tax benefits and will often be preferable to investing in a taxable brokerage account for older adults with earned incomes, but those tax benefits will tend to be modest. If the SEP-IRA allows non-SEP contributions, you can make regular contributions to your IRA (including recovery contributions to the IRA if you are 50 or older), up to the annual maximum limit. This 72-year requirement applies to most retirement accounts, including traditional IRAs, SEP and SIMPLE IRAs, and qualified plans, such as 401k, 403b and 457.As already mentioned, there is no age restriction for opening or making contributions to Roth and traditional IRAs. Jeffrey Levine, an expert in tax and financial planning, described traditional IRA contributions after the RMD era as something like a revolving door of IRA money.
However, if you're allowed to make contributions to a traditional IRA to your SEP-IRA account, you may be able to make IRA contributions to get up to speed. Since they are not subject to RMDs, Roth IRA contributions are a good option for people who earn money and who primarily save to leave assets to their heirs and do not expect to spend the money throughout their lives; the tax benefits extend over a much longer term. However, despite the fact that the Security Act raises the age limit for traditional IRA contributions, IRA contributions continue to have restrictions. Both the fact that Americans work longer than they used to, and the fact that the age requirement for making contributions to the traditional IRA was abolished, is a nod to the fact that Americans work longer than before.
However, while Roth IRAs or corporate retirement plans tend to be better receptacles for additional contributions from older workers, a traditional IRA may be appropriate in a handful of situations. Although earned income is required to make an IRA contribution, income limits apply to IRA contributions regardless of age. This includes wages and salaries, commissions, self-employment income, alimony, and separate, tax-exempt combat support payments. A SEP-IRA account is a traditional IRA and follows the same investment, distribution and reinvestment rules as traditional IRAs.
You can continue to contribute indefinitely, and because Roth IRAs are not subject to RMDs, your savings can accumulate tax-free for longer. The contribution limits for traditional IRA contributions that you can deduct on your tax return are the strictest; Roth IRA contributions are allowed with a higher income limit.