Retirement changes many aspects of our financial lives. For many people, this includes stopping contributions to retirement accounts.
But those who work past the traditional retirement age, or who work part-time in retirement, still have the option to save money in a retirement account. Even if they no longer have access to a workplace plan like a 401(k), they may be eligible to save money in an individual retirement account (IRA).
As with most things regulated by the IRS, though, the devil is in the details. Many types of retirement income cannot be contributed to an IRA.
Understandably, Kathy B. was unclear about what this meant for her after she lost her job. She asks Money Talks News:
“I was ‘separated’ from my job at the age of 72 in December 2024 when the company sold off the division I worked for. I received separation pay in January 2025 and have not found employment since then.
I make a monthly deposit into my Roth IRA but my only income for 2026 will be from Social Security and DIC from the VA.
Can I continue to make contributions to my Roth IRA or do I need to discontinue them now that I have no ‘earned’ income?”
Social Security and VA benefits
Kathy, you are correct that the type of income you receive determines whether you can contribute to an IRA. If you are not earning income through employment — which the IRS refers to as “earned income” — you typically cannot contribute to an IRA.
When you were working, your income was taxable compensation, which means your wages were eligible for deposit into your IRA. However, the income you receive now cannot be deposited into an IRA, whether Roth or traditional.
Social Security benefits are not considered earned income.
Your other income, dependency and indemnity compensation (DIC), is a tax-free benefit paid from the U.S. Department of Veterans Affairs (VA) to eligible surviving spouses of military service members. Because the IRS does not tax your DIC, it cannot be deposited into an IRA.
Earned vs. unearned income
Following are examples of what the IRS considers earned income for the purpose of IRA contributions, meaning they may be deposited into an IRA:
- Wages
- Salaries
- Commissions
- Self-employment income
- Taxable alimony
- Nontaxable combat pay
- Taxable non-tuition fellowship and stipend payments
Of course, IRA contribution limits as well as IRA income limits apply even when you have earned income. You can learn about the current limits in “IRS Boosts Limits for 7 Retirement Accounts — Including the First IRA Catch-up Hike in Ages. Here’s How Much More You Can Save in 2026..”
The IRS does not consider the following to be earned income, so they can’t be contributed to an IRA:
- Earnings and profits from property
- Interest and dividend income
- Pension or annuity income
- Deferred compensation
- Any amounts you exclude from income on your federal tax return
Note that if you make contributions to an IRA with ineligible income, you may face an excess contribution penalty of 6% if you don’t withdraw the contribution and any returns it generated by Tax Day (typically April 15).
