IRA Contribution

[KBTS]

A client wants to reduce the balance due on their tax return by contributing to an IRA - they are eligible to contribute the full $4,500. They asked if there was a limit on how long they had to let the money in the IRA. Since the client is 60, I could not think of any limitation on how long they had to keep the money there except for possibly lost interest if opened with a bank.

I had never thought of this question before and want to make sure I give them the correct advice. Anybody have other answers to this? Thanks

[Brian EA]

A client wants to reduce the balance due on their tax return by contributing to an IRA - they are eligible to contribute the full $4,500. They asked if there was a limit on how long they had to let the money in the IRA. Since the client is 60, I could not think of any limitation on how long they had to keep the money there except for possibly lost interest if opened with a bank.

I had never thought of this question before and want to make sure I give them the correct advice. Anybody have other answers to this? Thanks

They can keep it in there until they reach 70 1/2 or take it out next year. They do not have to pay any early withdrawal penalty; however if they opened it in the bank and they withdraw early they may be subject to penalty from the bank.

[Gretel]

As long as you are not talking about the saver's credit you should be fine.