As long as you continue to work—regardless of your age—you can continue to contribute to an IRA even though you must start taking required minimum distributions (RMDs) from tax-deferred retirement accounts after reaching starting age. Those ages vary depending on when you were born—72 for those born from July 1, 1949 through 1950…73 for those born in 1951 to 1959…and 75 starting in 2033 for those born in 1960 and later.
Putting money in tax-deferred accounts even while you are withdrawing from them can be useful if you need to lower taxable income. Example: Toward the end of a tax year, you realize that taking your RMD will push you into a higher income tax bracket or nudge you above thresholds that raise the premiums for Medicare Part B and prescription drug coverage two years later. An IRA contribution allows you to replenish retirement savings and take a deduction to avoid breaching those thresholds. Taxes will be due on the amount you contributed when it eventually comes out of the account—but by then your tax bracket may be lower.
Caveats: If you are still working for a company at age 72 or older, it may be smarter to contribute to your 401(k) there. The contribution is not considered taxable wages, and you don’t have to include those assets as part of your RMDs for the year (provided you are not the primary owner of the business). If you don’t need the tax deduction and want to leave money to your heirs, consider adding to a Roth IRA, which has no age-limit restrictions on contributions, plus beneficiaries don’t have to pay taxes on most withdrawals from inherited Roth IRAs.
