Magic IRA

[DMICPA]

Client is 62 has earned income etc.

For 2011 wants to contribute to his IRA $6,000. He will put the funds in tomorrow. Contributing to the IRA will save $1,600 in Federal Income Tax.


Next week, he wants to take out $6,000 of his IRA and report for 2012 as normal.


Is there any time limit as to when he can pull funds out of the IRA? It looks kind of funny as he just contributes for 2011 and then pulls it out for 2012.

Anyone heard of this?

[JohnH]

He can take it out the next day if he wants. Looks like a good strategy if his 2012 income is expected to be less that 2011

[JG EA]

But not for the 8880 credit - you have to say you won't take it out before the end of filing season.. But it sounds like he's over that income level anyway.

[dan doshan]

Every year I put some in my IRA to save on taxes to help compensate for the amounts my wife takes out each year from hers.

[JohnH]

Would it be simpler to just give her the money and cut out the middle man?

[Burke]

There is no tax law restriction on that. But his custodian/bank may have another idea. He may have to forfeit interest or incur some other penalty.