The Basic Rule: You Need Earned Income

You can open an IRA if you have earned income — money you made from working, not from investments or benefits. This is the main requirement. Earned income means wages from a job, self-employment income, or freelance work. It does not include Social Security, pension payments, interest, dividends, or rental income.

The amount you can contribute to an IRA each year is limited to either the maximum set by the IRS or your total earned income for that year, whichever is smaller. For 2024, the maximum contribution is $7,000 if you are under 50, and $8,000 if you are 50 or older. These limits change yearly, so check the IRS website for the current year.

You do not need a certain amount of income to open an account — even $1 of earned income qualifies you. You also do not need to be a U.S. citizen, though you do need a Social Security number or Individual Taxpayer Identification Number (ITIN) to open one.

Key Takeaways

  • You can open an IRA if you have earned income from work, and there is no minimum amount required.
  • Spouses with no earned income may be able to contribute through a spousal IRA, using their partner's income.
  • You can open an IRA at any age as long as you have earned income, but withdrawals before 59½ usually come with penalties.
  • You must have a valid Social Security number or ITIN to open an account at a bank or brokerage.
  • Some people cannot contribute the full annual maximum due to income limits on Roth IRAs, though Traditional IRAs have no income limit.

Age Does Not Stop You, But Withdrawals Have Rules

There is no age limit to open an IRA. A teenager with a summer job can open one. A 75-year-old can open one. What matters is earned income, not how old you are.

However, the IRS does restrict when you can withdraw money without penalty. If you withdraw before age 59½, you typically owe a 10% penalty plus income tax on the money you take out. There are some exceptions — for example, first-time home buyers can withdraw up to $35,000 from a Roth IRA without the penalty — but the general rule is that IRAs are meant to stay untouched until you are older.

Once you turn 73, you must start taking withdrawals from a Traditional IRA. This is called a required minimum distribution (RMD). Roth IRAs do not require withdrawals during your lifetime, which is one reason some people prefer them.

Spousal IRAs: Contributing Without Your Own Income

If you are married and do not have earned income, you may still contribute to an IRA through a spousal IRA. Your spouse's earned income counts, and you can contribute up to the annual limit (or their earned income, whichever is less). You each have your own separate account.

Both spouses must file a joint tax return for the year you want to contribute. The spouse with income does not have to contribute to their own IRA first — their income can fund both accounts. This is useful for stay-at-home parents or anyone temporarily out of the workforce.

Income Limits on Roth IRAs, But Not Traditional IRAs

A Traditional IRA has no income limit. Anyone with earned income can contribute, no matter how much they earn. However, if you or your spouse have a workplace retirement plan like a 401(k), the tax deduction for your contribution may be reduced or eliminated at higher income levels.

A Roth IRA has income limits. If your income exceeds a certain threshold, you cannot contribute directly to a Roth. For 2024, the limit phases out starting at $146,000 for single filers and $230,000 for married couples filing jointly. These limits change each year. If you earn too much for a Roth, you can still open a Traditional IRA or use a backdoor Roth strategy, though that involves more steps and may have tax consequences.

Who Cannot Open an IRA

You cannot open an IRA if you have no earned income. This includes children with no job, retirees living only on Social Security, and people receiving only investment income. The spousal IRA exception is the main workaround for non-working spouses.

You also need a valid Social Security number or ITIN. Banks and brokerages are required to verify your identity and tax status before opening an account. If you do not have either, you cannot open an IRA until you obtain one.

Some people are barred from opening certain types of accounts due to past financial conduct — for example, if you have been convicted of certain crimes or have unpaid tax debts — but this is rare and depends on the specific institution and situation.

Where to Open an IRA

You can open an IRA at a bank, credit union, brokerage firm, or investment company. Each offers different investment options. Banks typically offer IRAs with savings accounts or CDs. Brokerages offer stocks, bonds, mutual funds, and ETFs. Credit unions may offer both.

The process is straightforward: choose an institution, fill out an account application (usually online), provide your Social Security number or ITIN, and fund the account. You will need to decide whether you want a Traditional or Roth IRA, and the institution will ask you to name a beneficiary — the person who inherits the account if you die.

You can open multiple IRAs at different institutions if you want, but your total contributions across all accounts cannot exceed the annual limit.

Frequently Asked Questions

Can a teenager open an IRA?

Yes, if they have earned income from a job or self-employment. A 16-year-old working part-time can open an IRA. A parent or guardian may need to co-sign or help with the application, depending on the institution's rules for minors.

What if I do not have a Social Security number yet?

You cannot open an IRA without a Social Security number or ITIN. If you are a non-citizen, you can obtain an ITIN from the IRS. Once you have one, you can open an account at any bank or brokerage.

Can I open an IRA if I am self-employed?

Yes. Self-employment income counts as earned income. You can open a Traditional or Roth IRA. You may also want to explore a SEP-IRA or Solo 401(k), which allow higher contributions for self-employed people, but a regular IRA is a valid choice.

What happens if I contribute more than the annual limit?

The IRS charges a 6% penalty tax on the excess amount each year it stays in the account. You can withdraw the excess and the earnings on it to avoid the penalty, but you must do this by the tax filing deadline. It is better to check your income and contribution limit before you contribute.

Can I open an IRA if I have no job right now?

Not unless you have earned income from self-employment or a spouse with income to use for a spousal IRA. If you are unemployed with no other income, you cannot contribute. Once you start working again, you can open an account.