Are You Too Old to Open a Roth IRA?

A Roth IRA is a type of individual retirement account (IRA); contributions to one are made with after-tax dollars, and investment growth is tax-free. Since contributions are made with post-tax money, there is no upfront tax deduction in the year of contribution. However, this arrangement allows for tax-free withdrawals of earnings during retirement if the account holder is at least 59 ½ years old and has held the Roth IRA for a minimum of five years; this five-year period begins at the start of the year for which a contribution was made to this or any other Roth IRA the account holder owns.

Because contributions are made with after-tax funds, you are allowed to withdraw contributions without incurring taxes at any time, regardless of age. Moreover, earnings can be withdrawn tax-free after the five-year holding requirement and upon reaching 59½ years of age. That is especially advantageous if the retiree falls into a higher tax bracket. It should be noted that there are no mandatory distribution requirements for a Roth IRA. This feature makes the Roth IRA an effective tool for estate planning, as it allows the account to be transferred tax-free to beneficiaries without required minimum distributions (RMDs) for the original account owner. While the RMD rules do apply to any heirs, their withdrawals of contributions are exempt from taxation so are their withdrawals of earnings if the account is at least five years old.

Understanding a Roth IRA

A Roth IRA is a type of individual retirement account that gives the account owner tax-free growth on invested funds. Individuals invest using money that they have already paid taxes on, so there is no up-front tax deduction. But in addition to tax free growth, investors can pull out invested funds at any time without a tax penalty. Furthermore, you can withdraw any earnings in your Roth tax-free when you reach at least 59 1⁄2 years of age and have owned this or any other Roth IRA for at least five years. Roth IRAs are special retirement accounts because required minimum distributions (RMDs) do not apply to them.That makes Roth IRAs great estate planning tools. You can pass your Roth IRA to beneficiaries tax-free as long as you, the original owner, had the account for at least five years before passing away.and the beneficiary obeys certain rules. For example, a non-spouse beneficiary must empty the account within 10 years of the original account owner’s death. A spousal beneficiary faces no such deadline for emptying the inherited Roth IRA and is not subject to RMDs while they’re alive.

By contrast, a traditional IRA gives the account owner an up-front tax break because you are investing with pre-tax funds. This means that you will pay tax on all withdrawals from this type of account during your retirement years. It is important to note that your tax deduction may be reduced or phased out if either you or your spouse are covered by a retirement plan at work. While you are able to withdraw funds from your traditional IRA at any time, the amount withdrawn will be included in your regular income for tax purposes as well as possibly incurring a 10% penalty if you are under age 59½. Generally, you will be required to start taking RMDs at age 73, although if you are actively employed and participate in your employer’s workplace retirement plan, you may be able to delay taking distributions until the year that you retire.

Age Considerations for Roth IRAs

There are no age restrictions for setting up or contributing to a Roth IRA. However, for withdrawals of earnings to be tax-free, you must be at least age 59 ½ and you must have owned this account or another Roth IRA at least five years This means that account owners must have the account in place for a minimum of five years (from the beginning of the year in which it was set up) before any earnings can be made without incurring tax or a penalty. Even though you can set up and contribute at any time, if it is money that you will need in the short-term, a Roth IRA may not be the best investment vehicle to use if you are close to retirement age and think you may need access to the funds within that five-year holding period.

Income and Contribution Limits

The contribution limit to a Roth IRA for 2025 is $7,000; for those ages 50 and over, up to an additional $1,000 can be contributed, making their limit $8,000. There are, however, income limits that may also reduce or phase out your contribution eligibility:

• For married couples filing jointly or qualifying surviving spouses, the modified adjusted gross income (MAGI) thresholds have changed for the year 2025:
• If your MAGI is at least $236,000 (up from $230,000 in 2024), you are subject to certain limits.
• You cannot make a Roth IRA contribution if your MAGI is $246,000 (up from $240,000 in 2024) or more.
• For individuals filing as singles, heads of household, or married filing separately (who did not live with their spouse at any time during 2025), the thresholds are as follows:
• If your MAGI is at least $150,000 (up from $146,000 in 2024), you are subject to limits
• You cannot make a Roth IRA contribution if your MAGI is $165,000 (up from $161,000 in 2024) or more.
• For married individuals filing separately (who lived with their spouse at any time during the year), the thresholds remain the same for 2025 as they were for 2024:
•  If your modified AGI is greater than $0, you are subject to limits.
• You cannot make a Roth IRA contribution if your MAGI is $10,000 or more.

Benefits of Opening a Roth IRA Later in Life

The Roth IRA has some unique attributes that can make it especially appealing for older adults. There are no required minimum distributions at any age, which makes this type of investment account a very good tool for investors who want to continue the benefit of tax-free growth even as they advance through their seventies, especially if it is money that they hope to pass to beneficiaries tax-free. In this way, it is a great option for older investors who want to use this as an estate planning tool and do not intend to withdraw the funds themselves. While the account owner can avoid required minimum distributions (RMDs), their heirs may be subject to RMDs.

Strategic Considerations for Older Investors

Not only can earnings in a Roth IRA grow tax-free, you also do not have to pay taxes on your withdrawals of earnings if you follow certain rules that we’ve discussed. Plus, you can withdraw contributions tax-free any time. This means that Roth IRA withdrawals can augment income from Social Security benefits, 401(k) disbursements, or a traditional pension, all of which can be subject to taxes during retirement.

To determine if your Social Security benefits are taxable, you need to calculate the sum of one-half of your benefits plus your other income (including wages, salaries, interest, dividends, pensions, and tax-exempt interest). Once you have the total, compare it to see if it is higher than the base amount for your filing status.

Base amounts for each filing status:

• $25,000 if you’re single, head of household, qualifying surviving spouse, or married filing separately and lived apart from your spouse for the entire year,
• $32,000 if you’re married filing jointly,
• $0 if you’re married filing separately and lived with your spouse at any time during the tax year.

For example, if your base amount is $32,000 and you are married filing jointly, you could withdraw additional money from your Roth IRA, but it will not add to this total base income amount for calculating taxes, thereby avoiding paying taxes. In essence, withdrawing money from your Roth IRA to supplement your potentially taxable income can allow you to access a higher level of income during retirement, but avoid paying taxes.

The Bottom Line

It is never too late to open a Roth IRA. Anyone can open and start contributing to a Roth IRA at any time. There are several benefits for investors to assess, including tax-free growth, absence of required minimum distributions, and the ability to pass assets along to beneficiaries tax-free. While there is no up-front tax deduction, you can withdraw invested funds at any time without penalty. Because of the flexibility that a Roth IRA offers, it may be an advantageous investment tool to add to your portfolio.