The Roth IRA Age Limit

What is the Roth IRA age limit?

Does the IRS impose mandatory distributions at a certain age? And what's the minimum age for withdrawals?

These are all legitimate questions, and you need to know the answers.

Why?

Because if you open or fund a Roth IRA when you don't meet the basic eligibility requirements laid out by the IRS, then you can trigger taxes, excess contribution penalties, and other federal sanctions you don't want to deal with.

So take the time to learn the Roth IRA rules. Adhere to the IRS guidelines, and you set yourself up for a smooth and enjoyable Roth IRA experience.

Is There a Roth IRA Minimum or Maximum Age Requirement?

No. The IRS does NOT impose an age limit on who can or can't open a Roth IRA.

But...

The IRS does demand every Roth IRA account holder meet one particular requirement, regardless of age.

What requirement is that?

You must generate earned income.

That's right. To fund a Roth IRA, you must have taxable earned income for the year in which you wish to make your contribution.

As long as you have earned income, it doesn't matter if you're 5 years old, 45 years old, or 105 years old... You meet the basic requirement for funding a Roth IRA.

Need an example?

Let's say your 5 month old baby lands a blockbuster deal as the next Gerber baby. After a big photo shoot, your baby gets a check for $100,000. Can your baby open and fund a Roth IRA?

The answer is...

Yes.

It goes without saying you have to fill out the paperwork. But as long as your baby has documented taxable earned income, your baby is eligible to open and fund a Roth IRA (subject to the usual Roth IRA income limits, of course).

Obviously, this is an extreme example, but it vividly illustrates that no one is barred from making Roth IRA contributions because of any arbitrary Roth IRA age limitations.

Now, let's put your baby in a different situation...

What if your baby receives a $5,000 check (a gift) from grandma? Can your baby open a Roth IRA with that money?

No.

Why?

Because a gift is not earned income.

And earned income is the key to Roth IRA eligibility. So remember, the age of the account holder isn't really relevant. What really matters is earned income.

Are You Required to Make Withdrawals After a Certain Age?

Unlike a Traditional IRA, which requires you to take annual distributions after age 70 ½, a Roth IRA does not force you to withdraw funds once you reach a certain age.

In fact, you can continue to contribute to your Roth IRA long after age 70 ½ if you wish.

So what's the advantage here?

Flexibility.

Think about it...

If you're forced to withdraw funds when you don't need them, it puts you at a disadvantage. For one thing, you now have to find a new place to invest your money, one that probably lacks the tax-free growth offered by an IRA.

And on top of that, what if you're invested in stocks or bonds and the market for either one takes a nosedive right at the moment when you're required to withdraw money?

No matter how you look at it, forced distributions are a disadvantage.

Lucky for you, your Roth IRA won't put you at such a decided disadvantage.

For instance, if you're focused on estate planning, your Roth IRA provides a valuable vehicle for leaving your wealth to your heirs. If you're not required to take distributions at any age, you can simply leave your Roth IRA funds alone for the rest of your life. They continue to grow tax free until the time of your death, allowing your heirs to inherit a much larger nest egg than they otherwise would've inherited.

So the absence of any arbitrary Roth IRA age limit for taking mandatory distributions is a significant benefit which can save you tens of thousands of dollars in the long run...

Is There a Minimum Age for Taking Distributions?

The only age you need to commit to memory when it comes to your Roth IRA is age 59 ½.

Why?

Because that's the age you must reach before you can withdraw investment gains from your Roth IRA tax-free and penalty-free.

Now, you can certainly withdraw funds prior to age 59 ½, but if you withdraw investment gains, those gains are subject to income taxes and a 10% Roth IRA early withdrawal penalty.

But remember...

You can always withdraw your original contribution amounts tax-free and penalty-free, but the investment gains on those original contributions are subject to taxes and penalties if you withdraw them prior to age 59 ½.

And according to the IRS ordering rules for making a Roth IRA withdrawal, you must withdraw all of your original contributions first before you can begin to withdraw investment gains. So until you exhaust all of your original contributions through the withdrawal process, you don't have to worry about taxes or penalties.

But after age 59 ½?

As long as your account meets the Roth IRA 5 year rule, you can withdraw any funds from your Roth IRA tax free and penalty free... And that includes investment gains.

Need an example?

Let's say you invest $5,000 in your Roth IRA at age 30. Over time, your original contribution grows, and at age 59, your Roth IRA is worth $30,000. Can you withdraw all that money tax free and penalty free?

No.

You can withdraw $5,000 tax free and penalty free.

Why?

Because you made an original contribution of $5,000 with after-tax income, so you've already paid taxes on that money. But the remaining $25,000 is subject to income taxes and a 10% early withdrawal penalty.

However, one year later (when you're 60 years old), you can withdraw the entire $30,000 tax free and penalty free.

Why?

Because by then, your Roth IRA has met the 5 year rule, and you will be older than age 59 ½.

So the key age to remember when dealing with your Roth IRA is age 59 ½...

Conclusion

You don't have to worry about a Roth IRA age limit in regard to your eligibility to open or fund a Roth IRA.

Earned income, not age, is the key factor for determining basic Roth IRA eligibility.

You also don't have to concern yourself with forced withdrawals or required distributions once you reach a certain age. Unlike a Traditional IRA, which requires annual distributions after age 70 ½, you don't have to worry about mandatory withdrawals at an arbitrary age with a Roth IRA.

The only age you need to remember is age 59 ½. That's the age when (assuming your account meets the 5 year rule) you can withdraw funds tax free and penalty free.