Making Roth IRA Contributions, Receiving a Pension

My husband and I are retired, but we both receive pensions, and I earned some money last year selling my artwork. Can we make Roth IRA contributions for 2015?

10 Things You Must Know About Roth Accounts

You need to have earned income from a job to qualify to make IRA contributions. So your pension income doesn't count, but your art-sale income does. If you earned enough money, you could contribute to your own Roth IRA as well as make spousal contributions to your husband’s account. However, you cannot contribute more than your earned income for the year.

Because you are self-employed, your maximum contribution is based on the net earnings from your business (self-employment income minus the deductible part of your self-employment taxes).

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If your net self-employment income is $13,000 or more, you can make the maximum $6,500 contribution to your Roth IRA and contribute $6,500 to your husband’s spousal IRA (which includes $1,000 in catch-up contributions if you’re age 50 or older). Otherwise, your IRA contributions (plus spousal IRA contributions) are limited to your net self-employment income.

You can contribute to a Roth at any age (the age cutoff for a traditional IRA is 70½). It sounds like you'll have no trouble with the top end of the Roth requirements. Your modified adjusted gross income in 2015 must be less than $193,000 for married couples (or $131,000 for single filers) in order to make Roth contributions.

Because you're self-employed, you may also be able to make contributions to a Simplified Employee Pension (or to a solo 401(k), if you already have an account opened). Those contribution limits are also based on your income -- see How Self-Employed Workers Can Save for Retirement for more information about the calculations, and IRS Publication 560 Retirement Plans for Small Business for details.

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.