You can't make contributions to the traditional IRA after age 70 and a half, whether you're working or not. 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. If you're still working, you can contribute the full amount of your salary deferral to a Roth 401 (k), regardless of your age. Like the traditional 401 (k) plan, RMDs are required once you leave the service or if you own 5% or more of the company that employs you.
This is a key difference between a Roth 401 (k) and a Roth IRA. However, distributions may not be taxable (check with your tax advisor). People who are 50 or older at the end of the calendar year can make annual contributions to get up to speed. There is no maximum age for participating in a 401 (k) plan.
As long as you're still working, you're never too old to contribute. If your employer offers group benefits that include a 401 (k) plan, you have a great way to save for retirement. Regardless of your age, if you're still working, you can take advantage of tax benefits and any equivalent contribution from your employer. If you're over 59.5 years old, you can withdraw from a 401 (k) plan without penalty.
If you need more information about participating in a 401 (k) plan, talk to our experienced agent. Workers over 72 have the ability to save and defer taxes through Roth IRAs and qualified plans. Recovery contributions to an IRA are due before the due date of your tax return (not including extensions). In the past, if you were over 70 and a half years old, you would lose the ability to contribute to a traditional IRA.
However, if you're still working at age 70.5, it's usually possible to delay the required distributions until the year you retire, as long as you don't own more than five percent of the company. While the income restrictions that govern who can contribute to a Roth IRA may be difficult to overcome, they are not impossible. Although it depends on the state in which you live and file your taxes, some states that impose a state income tax offer more favorable tax treatment to people who make contributions to and receive distributions from IRAs and other qualified plans.