An Individual retirement account (IRA) is a popular and effective way to save for retirement. But who exactly is eligible to start an IRA? The good news is that almost anyone can open and contribute to an IRA, as long as they have earned income.

Individuals who are under the age of 70 ½ and have earned income from a job or self-employment are eligible to open and contribute to a Traditional IRA. Earned income includes wages, salaries, commissions, and bonuses, as well as income from self-employment. However, individuals who are married and file taxes jointly can also contribute to a Traditional IRA, even if only one spouse has earned income.

For those who do not have earned income, such as stay-at-home parents or retirees, a Spousal IRA may be an option. A Spousal IRA allows a non-working spouse to contribute to an IRA based on the earned income of their working spouse.

In addition to Traditional IRAs, there are also Roth IRAs, which offer tax-free withdrawals in retirement. In order to contribute to a Roth IRA, your income must fall within certain limits. For 2021, individuals with a modified adjusted gross income (MAGI) of $140,000 or less (or $208,000 or less if married and filing jointly) are eligible to contribute to a Roth IRA.

It’s important to note that there are annual contribution limits for both Traditional and Roth IRAs. For 2021, the contribution limit is $6,000 for individuals under the age of 50, and $7,000 for those age 50 and older. These limits are subject to change each year based on inflation.

In conclusion, almost anyone can start an IRA as long as they have earned income. Whether you choose a Traditional or Roth IRA will depend on your individual financial situation and goals. It’s never too early to start saving for retirement, so consider opening an IRA today to secure your financial future.

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