Can You Put Money into a Roth After You Retire? | Financial Advisor | Christy Capital Management

Описание: Today we’re discussing whether or not you can do Roth after you retire.

There are two different ways that you can put money into a Roth. You can make a contribution to Roth or you can do a Roth conversion. Your contributions to Roth are what you can do with your TSP. As you’re making contributions at work, you can contribute to TSP. You can also contribute to a Roth IRA.

One of the requirements to make a contribution to Roth is that you have to have earned income. You have to have a 1099 or W-2 income from working. No earned income, no Roth contributions. It's the same way in retirement. If you are not actively earning income through a job, you cannot contribute to Roth. Your pension and Social Security do not count as income to make a contribution. So if you retire and have a part-time job, you could contribute up to the limit as long as you have an equal amount of income. If you only have $5,000 worth of earned income, then you could only contribute up to $5,000 to your Roth IRA. But if you’re retired and you don’t have any outside employment, then you cannot contribute to a Roth IRA.

So does that mean you can’t do Roth at all? No, it just means you can’t make a contribution to a Roth account. You are still able to do Roth conversions. There are no income limitations to do a Roth conversion. You don’t have to have a certain amount of earned income. There’s also no earnings limit. Your income can be unlimitedly high and you can still do a Roth conversion.

A Roth conversion is where you take traditional money from an IRA, move it to a Roth IRA, and go ahead and pay the taxes now. This allows you to create a large Roth account over time as you continue to do Roth conversions each year by moving the money over.

With a Roth IRA, there are contribution limits of $7,000 a year if you’re under the age of 50 and $8,000 a year if you’re over the age of 50, but there are no limitations with Roth conversions. You could Roth convert $1 million all in one year if you wanted to. Now keep in mind that the Roth conversion amount is considered taxable income in that year. So for efficient tax planning strategies, you probably would never do a $1 million Roth conversion all in one year, but you could. The only limit to a Roth conversion is the amount of taxes you wish to pay.

Generally speaking, people are willing to Roth convert up into the 22% bracket and up to the 24% bracket. The next bracket up is 32%. I have yet to find somebody that wants to convert up into the 32% bracket.

So, can you do a Roth IRA in retirement? Yes, you can. Everybody will be able to do Roth conversions. If you have earned income, you could also make some Roth contributions as long as you’re below the income limitations.

The information provided is not intended as tax or legal advice. Figures shown are for illustrative purposes only furthermore, the information nor the illustrations provided may not be used to avoid any tax penalties. This content represents the general views of Christy Capital Management and should not be regarded as personalized investment advice Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice. Retirement Benefits Institute, Inc., and a portion of its contents merged with Christy Capital Management Inc. Brandon Christy, former President of Retirement Benefits Institute, is also the current President of Christy Capital Management, Inc., a registered investment adviser.