3654 / Who may establish an IRA?
Virtually any individual who wishes to do so may establish a traditional individual retirement plan. To deduct contributions to such a plan once it is established and avoid tax penalties for excess contributions, an individual must have compensation (either earned income of an employee or self-employed person, or alimony prior to 2019), and before 2020, must not have attained age 70½ during the taxable year for which the contribution is made.1
Note that the SECURE Act eliminated the age cap on IRA contributions. Further, the 2017 tax reform legislation eliminated the deduction for alimony payments and provides that alimony is no longer includable in the recipient's income for tax years beginning after 2018. Because only "taxable" alimony constitutes "compensation," alimony is no longer included after 2018.
Planning Point: Note that the second Trump administration ordered the Treasury Department to establish a new "TrumpIRA.gov" website to provide taxpayers with information about establishing IRAs. The executive order did not create a new type of IRA or change the rules governing IRAs.
If an individual is an "active participant" ( Q 3666), the deduction may be limited ( Q 3656). Any individual who can make a rollover contribution ( Q 3992) may establish an individual retirement plan (or more than one plan) to receive it ( Q 3996 to Q 4012).2
To establish and contribute directly to a Roth individual retirement plan, an individual (1) must have compensation (either earned income of an employee or self-employed person, or alimony (but see above)), and (2) must not have adjusted gross income (in 2025 (projected)) (a) of $246,000 or above in the case of a taxpayer filing a joint return, (b) or $165,000 or above in the case of a taxpayer filing a single or head-of-household return,3 or (c) $10,000 or above in the case of a married individual filing separately.4 In 2024 these amounts were $240,000 for joint returns and $161,000 for single or head-of-household, or $10,000 or above for married filing separately. An individual who satisfies these requirements may establish and contribute to a Roth IRA ( Q 3659).5
Planning Point: For taxpayers who exceed the income limits and are thus prohibited from contributing directly to a Roth IRA, a Roth IRA may still be established to receive rollover distributions from other IRAs or qualified plans (this strategy is commonly referred to as the backdoor Roth IRA).
As to what constitutes "compensation," see Q 3665.
An estate may not make a contribution on behalf of the decedent.6
1. IRC § 219.
2. Special Ruling 9-28-76.
3. Notice 2023-75.
4. IRS Pub. 590.
5. IRC §§ 219, 408A; IR-2011-103.
6. Let. Rul. 8439066.