Personal Finance and Investing

A HERETIC I AM

(24,675 posts)

7. Seems to me it would be a wash.

Mon Apr 11, 2022, 09:20 PM

Apr 2022

The answer to your question is yes, if your IRA is just a traditional and not a "Simple IRA".

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals

You have to pay taxes on the money either way.

If you contribute the $7,000 to an IRA before tax day, it will reduce your AGI (as I'm sure you are aware) but if you take it as a distribution later in the year, it will count as taxable income for your 2022 taxes.

It seems to me it would just be a wash, unless your desire is to simply delay paying the taxes on seven grand.

The time constraints mentioned (Leaving assets in the account for 5 years) only apply to Roth IRA's.

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Does this tax strategy make any sense? [View all] cilla4progress Apr 2022 OP

I think IRA's have a 5 year rule. Gains can be taxed underpants Apr 2022 #1

Good point. Thanks. cilla4progress Apr 2022 #2

I have some very strong advice: SCantiGOP Apr 2022 #3

I see what you did there! cilla4progress Apr 2022 #4

There's a 10% income tax penalty for early IRA withdrawals, see the IRS webpage on this... PoliticAverse Apr 2022 #5

Not if you are cilla4progress Apr 2022 #6

Seems to me it would be a wash. A HERETIC I AM Apr 2022 #7

This is consistent with my research - cilla4progress Apr 2022 #8

They can't keep you from your money. A HERETIC I AM Apr 2022 #9

Wow, so helpful, Heretic! cilla4progress Apr 2022 #10