The magic age (for your IRA)
of 70 & 1/2

Q. My husband is approaching the magic age of 70 and ½. Does this mean he can no longer contribute to his IRA?

Does he have to take it out of the IRA and put it somewhere else? Why do we have to do this at this age?

You can no longer make IRA contributions into a regular or nondeductible IRA beginning in the year in which you turn age 70 1/2.

You can still make Roth IRA contributions, assuming that you have sufficient earned income. You can also continue making IRA contributions into a spousal IRA, assuming that the nonworking spouse has not attained age 70 1/2.

Beginning in the year that you attain age 70 1/2, you must begin to make withdrawals from a regular or nondeductible IRA.

For this first year only, the withdrawal may be delayed until April 1 of the following year. The minimum withdrawal amount is based on tables published by the IRS.

Withdrawn amounts can be invested in your name (as opposed to the name of the IRA), and will be taxed as a typical investment.

The government added these rules to force taxpayers to use their IRA for retirement needs.

Without these rules, and the strict penalties backing them up, many taxpayers would continue to let these funds grow tax-deferred. In essence, this sets a limit on how long the government is willing to delay receiving the tax revenues.