For an IRA: You or spouse must have earned income
— -- Q: I'm 61 years old, no longer working and will be inheriting money. Can I still invest in an IRA using the inherited money?
A: On its face, the answer to your question is no.
You must contribute earned income to both a traditional IRA and Roth IRA. Earned income is money you generate from wages, self-employment, a partnership or even alimony. But an inheritance, or income from an inheritance, is not earned income and therefore cannot be contributed to an IRA.
But you do have some options. The easiest suggestion would be to get some sort of job. With earned income, you can contribute to a traditional IRA until you turn 70 ½ years old. And you can contribute to a Roth IRA even after you turn 70 ½ .
Again, though, you must have earned income, so it might be income working part time. Remember, though, that the amount you can contribute is limited by the amount of your earned income.
Another factor to consider is your spouse. If your spouse has earned income, and you file your income taxes jointly, you may also contribute to an IRA. This might be a great way for you, as a couple, to save more for retirement than you would just from one spouse's income.
These are just a couple of options. For more information, you can go to the IRS site, or, if it's too busy this time of year, Vanguard provides helpful contribution tips here.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.
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