Can I Save My Social Security Benefits in an IRA?

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 of saving money in a retirement account. Even if they no longer have access to a workplace plan such as a 401(k), they may be eligible to save money in an individual retirement account (IRA).

As with most things regulated by the IRS, however, the devil is in the details. Most types of retirement income cannot be rolled over into an IRA.

Understandably, Kathy B. was unclear about what this meant for her after losing her job. Asks Money Talks News:

“I was separated from my job at the age of 72 in December 2024 when the company sold the division I was working for.

I make a monthly deposit into my Roth IRA but my only income for 2026 will come from Social Security and DIC from the VA.

Can I continue to make contributions to my Roth IRA or do I need to stop since I don’t have any ‘earned’ money?

Social Security and VA Benefits

Kathy, you are correct that your income determines whether you can contribute to an IRA. If you don’t earn money from employment — what the IRS refers to as “income” — you generally can’t contribute to an IRA.

While you were working, your salary was taxable compensation, meaning your salary was eligible to be deposited into your IRA. However, the money you earn now cannot be put into an IRA, whether it’s a Roth or traditional.

Social Security benefits are not considered earned income.

Your other income, dependency and indemnity compensation (DIC), is a free benefit paid from the US Department of Veterans Affairs (VA) to eligible surviving spouses of military service members. Because the IRS doesn’t tax your DIC, it can’t be rolled into an IRA.

Earned income versus unearned income

The following are examples of what the IRS considers to be earned income for the purpose of IRA contributions, which means it may be included in an IRA:

• Salaries
• Salaries
• Commissions
• Self-employment income
• Taxable alimony
• Unaffordable combat pay
• Non-taxable fellowship and stipend payments

Of course, IRA contribution limits and IRA income limits apply even after you earn money. You can read about the current limits in “IRS Raises Limits on 7 Retirement Accounts — Including First-Year IRA Access Trip. Here’s More to Save in 2026..”

The IRS does not consider the following to be income, so they cannot be contributed to an IRA:

• Income and profit from property
• Interest and dividends
• Annuity or pension
• Deferred compensation
• Any amounts you don’t include in income on your federal tax return

Note that if you contribute to an IRA with non-qualified income, you may face a 6% excess contribution penalty if you don’t withdraw the contribution and any returns generated by Tax Day (usually April 15).