TP's birth date is 6/7/43. He was 70 yrs old 6/7/13. So he will be 70 1/2 as of 12/7/13. The way I read it, he cannot make an IRA contribution, assuming he has qualifying earnings, for the tax year 2013? Even if he were to make it before his 70th birthday? And if he postpones a withdrawal until 4/1 of 2014, he must take two in that year?
-
-
Correct on both counts.
He can still make contributions to a Roth IRA which may be limited by his filing status and earnings.
Since he turns 70 1/2 Dec 7, 2013 he is not eligible for any traditional IRA contributions.
As for the withdrawals, the first one due on Dec. 31 in the year he turns 70 1/2 (2013), may be delayed until April 1, the next year. For the next year (2014) his RMD is due Dec 31, 2014.
Mike -
Point of note
I agree with both posts.
As for the "double" RMD in 2014, the client may wish to reconsider the merits of doing such. While he would effectively be transferring 2013 income to calendar year 2014, that is not always a wise move.
Taking two RMD's in 2014 would obviously raise AGI, which could have a detrimental effect on matters related to AGI (such as floor for medical deductions). If the client is not already subject to 85% taxation on Social Security benefits, that could be another issue to consider. The old "double whammy" effect.
And taking things one step further: If the client has significant income, he could face the "multiplier" effect for his Medicare B premiums and even perhaps start being subjected to some Obamacare taxes.
Yes, things are not quite as simple as they once were. . . .
FEComment
Comment