Not everyone can have a Roth IRA. If you earn too much or too little, you will not be able to contribute to this type of individual retirement account (IRA).

Roth IRAs allow tax-free qualified withdrawals if certain conditions are met. Roth IRAs are similar to traditional IRAs; how they are taxed is the most striking distinction between the two. Roth IRAs are funded with after-tax dollars, which means the contributions are not tax-deductible. But the money is tax-free when you start withdrawing funds. Conversely, traditional IRA deposits are most often made with pretax dollars, so you usually get a tax deduction on your contribution, then pay income tax when you withdraw the money during retirement.

Roth IRAs are often better choice than traditional IRAs for some retirement savers; however, Roth IRAs are not available for all savers.

Income Limits for Roth IRAs

Anyone who has earned income can have a Roth IRA, as long as their income for a given tax year is neither too high nor too low. If your annual income is above a certain amount, which the Internal Revenue Service (IRS) adjusts periodically, then you become ineligible to contribute.

If you file taxes as a single person, your modified adjusted gross income (MAGI) must be less than $129,000 for the tax year 2022 to contribute the full amount ($138,000 in 2023). Married couples filing jointly must earn less than $204,000 in 2022 ($218,000 in 2023).

Above these incomes, the amount that you can contribute to a Roth IRA begins to phase out. In 2022, individuals whose MAGI is $144,000 and above ($153,000 in 2023) and married couples filing jointly whose MAGI is $214,000 and above in 2022 ($228,000 in 2023) cannot contribute to a Roth IRA.

Conversely, you can never contribute more to your IRA than your earned income in that tax year. If you don’t earn anything in a tax year, you will be ineligible to contribute to your Roth IRA for that year. You can still hold the account, but you won’t be able to add to it.

It’s also worth paying attention to the definition of earned income that the IRS uses to determine eligibility for Roth IRAs. For individuals working for an employer, compensation that is eligible to fund a Roth IRA includes wages, salaries, commissions, bonuses, and other amounts paid to the individual for the services that they perform. It’s generally any amount shown in Box 1 of the individual’s Form W-2.

For a self-employed person, or a partner or member of a pass-through business, compensation is the individual’s net earnings from their business, less any deduction allowed for contributions made to retirement plans on the individual’s behalf and further reduced by 50% of the individual’s self-employment taxes.

Money related to divorce—alimony, child support, or in a settlement—also can be contributed if it is related to taxable alimony received from a divorce settlement executed prior to Dec. 31, 2018.

What sort of funds aren’t eligible? The list includes:

• Rental income or other profits from property maintenance
• Stock dividends and capital gains   
• Interest income 
• Pension or annuity income 
  
• Passive income earned from a partnership for which you do not provide substantial services
  

When using this definition of compensation, if your income either is above the Roth IRA limit or is zero for a tax year, then you won’t be able to contribute to a Roth IRA for that year.

Age Limits on Roth IRAs

Though Roth IRAs are often thought of as retirement accounts and are most often used in this way, there are no limits on who can contribute to them and when (as long as they meet the income requirements above).

In other words, there is no age threshold or limit for making Roth IRA contributions. For example, a teenager with a summer job can establish and fund a Roth. (It might have to be a custodial account if they’re underage.) On the opposite end of the spectrum, an employed person in their 70s can continue to contribute to a Roth IRA.

People of all ages can also contribute to traditional IRAs. In the past, participants in a traditional IRA could not make contributions after age 70½. But with the December 2019 passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, there is no longer an age cutoff on traditional IRA contributions.

Also, the fact that you participate in a qualified retirement plan has no bearing on your eligibility to make Roth IRA contributions. So if you have the money and meet the income limitations, you can contribute to a 401(k) plan at work and then contribute to your own Roth IRA.

The Bottom Line

Roth IRAs are open to anyone who earns income in a given tax year, as long as they don’t earn too much or too little. If your income is too high, you are barred from contributing to a Roth IRA, and you can only contribute as much as you earn in a given year to your Roth IRA.

Otherwise, the eligibility rules for Roth IRAs are broad. There is no age limit for opening a Roth IRA, and you can keep funding this account long after you retire.