Can We Invest Social Security Disability in a Roth IRA?

On This Page

1. Individuals Who Draw Social Security Disability Insurance Can Make IRA Contributions
2. Could My Roth IRA Affect My SDI?
3. Can I Invest Other Disability Benefits in a Roth IRA?
4. How Much Can I Put Into My Roth IRA Each Year?
5. What Should You do If Your Roth IRA Contributions Impact Your Benefits?
6. Contact Berger and Green for Questions About Your SSD Payments

REVIEWED BY

C. William Kenny

December 12, 2023

Board certified by National Board of Trial Advocacy

You cannot invest Social Security Disability payments in a Roth IRA. However, you can continue to work part-time and invest your earned income while still receiving benefits. 

Individuals Who Draw Social Security Disability Insurance Can Make IRA Contributions

Almost anyone who works a job and has earned income can open and contribute to a Roth IRA, including those drawing Social Security Disability Insurance (SSDI) benefits. With this type of individual retirement account, you pay taxes upfront, allow your money to compound, and withdraw it tax-free during retirement. 

If you continue to work part-time while getting benefits, you qualify to invest in a Roth IRA as long as you meet other qualifications. Disability benefits do not count as earned income, so you will need to work and draw monthly disability to contribute to this type of retirement account.

Could My Roth IRA Affect My SDI?

The only way your Roth IRA can affect SSDI is if you work too much. You can work part-time and receive a limited amount of income while you draw benefits, as long as you remain below the current substantial gainful activity (SGA) limit. According to the Social Security Administration (SSA), the SGA for 2022 is between $1,350 per month unless you are blind and then the limit is $2,260 per month.

Earning more than the monthly SGA can disqualify you from receiving monthly benefits. It is also important to notify the SSA you will return to work before you begin engaging in job-related activities. If you do not notify Social Security, you could jeopardize your benefits.

Can I Invest Other Disability Benefits in a Roth IRA?

To this point, we have only mentioned SSDI because it is difficult to draw Supplemental Security Income (SSI) benefits and maintain a Roth IRA. While you can work part-time and contribute up to the legal maximum, it will count against you when the SSA reevaluates your financial situation. 

As a part of getting SSI, you have to meet strict limits on your available assets. These assets would include your Roth IRA, and your retirement savings could prevent you from continuing to receive SSI.

How Much Can I Put Into My Roth IRA Each Year?

The U.S. Internal Revenue Service (IRS) sets maximum limits for contributions to Roth IRAs. The IRS determines this contribution based on your modified Adjusted Gross Income (AGI) and filing status. 

While you must have earned income to invest, unearned income does not prevent you from making contributions. However, you will only be able to invest the amount you made from working. As long as you stay below the IRS maximum, you can put the equivalent of all your earned wages from the year into your Roth IRA.

For example, imagine you collect SSDI for a back problem, but you can still work a few hours per month filing and taking care of office duties. You earn only about $1,200 a year. You can invest the total amount of your annual income in a Roth IRA.

What Should You do If Your Roth IRA Contributions Impact Your Benefits?

As mentioned, you could lose your SSDI payments if you earn more than the allowed SGA limit. According to the SSA, benefits will discontinue if you can work at a level that provides an income higher than the SGA or the agency determines your condition has improved to the point you are no longer disabled. The SSA conducts continuing disability reviews (CDRs) about every three years to assess your condition.

For SSI payments, your countable income and resources must fall below the SSA’s requirements. If Roth IRA contributions put you above the minimum income or resources level, it could jeopardize your benefits. If the SSA discontinues your SSI or SSDI payments, you can appeal the decision. There are four steps to the appeals process:

• Reconsideration – You can request that someone not involved with the initial decision to discontinue your benefits review your claim. You can make this request online. 
• Hearing by an Administrative Law Judge (ALJ) – You can ask for a hearing before a Judge. The hearing can take place by phone, video conference, or in person.
• Review by an appeals council – If the council takes your case for review, it will either make a decision or refer your claim back to an ALJ. 
• Federal court review – If you disagree with the outcome of your appeal, you may qualify to take action in a civil suit in federal district court. 

Contact Berger and Green for Questions About Your SSD Payments

Our disability lawyers can help you understand how your benefits will impact your retirement savings. If you have questions or concerns about how your disability affects your retirement investments, or if you believe the SSA is unfairly withholding your benefits, we can help. 

The disability team at Berger and Green offers free case reviews and can help you fight for the benefits you deserve. Call us today at (412) 661-1400.